58 Government Finance Statistics Manual 2014
of a market-equivalent price needs to be made. Al-
though, conceptually, adjustment should be made
when actual exchange values do not represent mar-
ket prices, this may not be practical in many cases. In
some cases, transfer pricing may be motivated by in-
come distribution or equity buildups or withdrawals.
Replacing book values with market-value equivalents
is desirable in principle, when the distortions are large
and when the availability of data (such as adjustments
by customs or tax offi cials or from partner economies)
makes it feasible to do so. Selection of the best market-
value equivalents to replace book values is an exercise
calling for cautious and informed judgment. In many
cases, compilers may have no choice other than to ac-
cept valuations based on explicit costs incurred in
production or any other values assigned by the unit.
3.123 While some nonmarket transactions, such
as grants in kind, have no market price, other non-
market transactions may take place at implied prices
that include some element of grant or concession so
that those prices also are not market prices (see para-
graphs 3.10–3.11). Examples of such transactions
could include negotiated exchanges of goods between
governments and governments’ concessional lending.
While there is no precise defi nition of concessional
loans, it is generally accepted that they occur when
units lend to other units and the contractual interest
rate is intentionally set below the market interest rate
that would otherwise apply. Th e degree of concession-
ality can be enhanced with grace periods (see para-
graph 6.69), frequencies of payments, and a maturity
period favorable to the debtor. Since the terms of a
concessional loan are more favorable to the debtor
than market conditions would otherwise permit, con-
cessional loans eff ectively include a transfer from the
creditor to the debtor. However, except for the case of
concessional lending to government employees (see
paragraph 6.17 and Chapter 6, footnote 11) and con-
cessional lending by central banks (see Box 6.2), the
means of incorporating the impact of concessional
lending into GFS have not been fully developed. Ac-
cordingly, until the appropriate treatment of conces-
sional debt is resolved, information on concessional
debt should be provided as supplementary informa-
tion (see paragraph 7.246).
3.124 Where a single amount payable/receivable
refers to more than one transaction category, the indi-
vidual fl ows should be partitioned and recorded sepa-rately (see paragraph 3.29). In such a case, the total
value of the individual transactions aft er partitioning
must equal the market value of the exchange that ac-
tually occurred.
3.125 Th e value of fl ows that are not already ex-
pressed at their market value, such as barter transac-
tions, must be estimated. In addition, market values
for many stock positions will not be readily available
and must be estimated. Th e following list suggests
several estimation possibilities. Th e choice of which
method to use in a given circumstance depends on
the information available.- It may be possible to estimate the values of trans-
actions based on values taken from markets in
which similar transactions take place under
similar conditions. Th e value of certain stock
positions, primarily fi nancial assets, may also be
estimated using market transactions involving
similar assets that take place at the end of the re-
porting period. - Flows and stock positions involving existing
fi xed assets can be valued using the market price
for similar new goods, properly adjusted for con-
sumption of fi xed capital and other events that
may have occurred since they were produced. - If there is no appropriate market in which a par-
ticular good or service is currently traded, the
valuation of a fl ow involving that good or service
may be derivable from the market prices of simi-
lar goods and services by making adjustments for
quality and other diff erences. - Th e value of fl ows and stock positions of assets
may be estimated on the basis of the historic
or acquisition cost of the item, adjusted for all
changes that have occurred since it was pur-
chased or produced, such as consumption of
fi xed capital, holding gains or losses, depletion,
exhaustion, degradation, unforeseen obsoles-
cence, and exceptional losses.^26 - Goods and services can be valued by the amount
that it would cost to produce them in the cur-
rent reporting period. For market producers,
the market value of a nonfi nancial asset valued
in this way should include a mark-up that re-
fl ects the net operating surplus attributable to
(^26) Th is estimate is also referred to as the “written-down current
acquisition” value.