Government Finance Statistics Manual 2014

374 Government Finance Statistics Manual 2014

services.^22 Th e GFS classifi cations do not specifi cally

require the identifi cation of transactions in goods

and services with nonresidents. However, where these

transactions can be identifi ed and classifi cations are

built into the underlying general government sector ac-

counting system, the information should be provided

to balance of payments compilers. Th e value of transac-

tions in goods and services entered into with nonresi-

dents in GFS may diff er from the international statistics

that follow the SNA treatment of insurance services

and standardized guarantee fees (see paragraph A7.29).

Th e primary income account.

A7.82 Th e primary income account shows primary

income fl ows between resident and nonresident insti-

tutional units. Primary income represents the return

that accrues to an institutional unit for its contribu-

tion to the production process or for the provision of

fi nancial assets and renting natural resources to other

institutional units.

A7.83 Th e international accounts distinguish the

following types of primary income:

• Compensation of employees


• Investment income
   Dividends
   Reinvested earnings
   Interest
   Investment income attributable to policyhold-
  ers in insurance, standardized guarantees, and
  pension funds


• Other primary income
   Rent
   Taxes on production and imports
   Subsidies.
  A7.84 Th e consistency in data between the GFS
  and primary income account can be established only
  to the extent that suffi cient supplementary details are
  separately identifi ed in GFS, or the underlying source
  data. Th e following linkages exist between the pri-
  mary income account and GFS:


• Compensation of employees: To the extent that
  the resident government employs nonresident

(^22) See the BPM6, paragraphs 10.173–10.181.Th e criteria for the
identifi cation of these fees are the same as in the SNA and GFS.
individuals, compensation of employees of gov-
ernment would include amounts payable to non-
residents that should be recorded in the primary
income account of the balance of payments.
Because government employment usually has
some residence criteria as a precondition, these
amounts are oft en not very large. However, in the
case of territorial enclaves, all compensation of
employees payable by government to residents of
the host country should be included in the pri-
mary income account. Th e GFS classifi cations do
not specifi cally require the identifi cation of com-
pensation of employees to nonresidents. How-
ever, when such payments are identifi ed in the
underlying source data system, the information
should be reported consistently in the GFS and
primary income account.

• Investment income: Th e contribution of the gen-
  eral government sector to investment income is
  mainly derived from the nonresident portion of
  the GFS items interest (GFS revenue item 1411
  and GFS expense item 24) and dividends (GFS
  revenue item 1412 and GFS expense item 2811).
  It can therefore be linked with the GFS accounts,
  if underlying source data distinguish between
  receivables and payables from/to residents and
  nonresidents. While the categories of investment
  income are conceptually the same for GFS and
  the international accounts, the value of transac-
  tions with nonresidents in GFS may diff er from
  the international statistics due to the treatment
  of FISIM (see paragraph A7.29). Where general
  government sector units control insurance, stan-
  dardized guarantees or pension schemes, they
  attribute investment income to policyholders in
  these schemes. Th ese policyholders may include
  nonresidents, in which case the relevant portion
  of the property expense for investment income dis-
  bursement (GFS expense item 2813) should be
  consistent with the corresponding item recorded
  in the primary income account. Where a general
  government unit or public corporation has for-
  eign direct investments in nonresident special
  purpose entities (SPEs), or foreign branches of
  public corporations, reinvested earnings, as re-
  ported in the primary income account, should
  be recorded separately in GFS (GFS revenue
  item 1416). Similarly, where public corpora-
  tions have foreign direct investors or investment
  fund shares/units, reinvested earnings should be