International accounts

The BOP is a statistical statement of all transactions made between entities in one country and the rest of the world over a defined period of time, such as a quarter or a year. The IIP is a statistical statement that shows at a point in time the value of financial assets of residents of an economy that are claims on nonresidents, and the liabilities of residents of an economy to nonresidents. The difference between the assets and liabilities is the net position in the IIP and represents either a net claim on or a net liability to the rest of the world.

The Norwegian BOP and IIP is presented in accordance with the latest internationally approved guidelines. These are specified in "The Balance of Payments Manual, 6th edition" (BPM6), published by the International Monetary Fund (IMF). The underlying principles and definitions presented in the BPM6 are in full accordance with the international statistical framework for the National Accounts, as laid down in the manual "System of National Accounts 2008" (2008 SNA). 2008 SNA is a joint publication by several international organizations, including the United Nations and the IMF.

The European Union (EU) has compiled its own edition of the National Accounts manual, "European System of Accounts 2010" (ESA 2010), which accommodates special conditions in member countries. According to the European Economic Area Agreement (EEA Agreement), Norway is obligated to comply with ESA 2010. The reporting of National Accounts data, as well as BOP and IIP data, to EU's statistical office Eurostat, has a legal basis in regulation (EC) No 184/2005.

Basic concepts and recording principles

Like the National Accounts, the BOP and IIP accounts are constructed around three basic concepts: statistical units, economic values and transactions. Briefly, the accounting systems describe transactions and positions between statistical units in which economic values are provided or received in exchange for other economic values.

• Statistical units are institutional units which make economic decisions on an independent basis and can present complete accounts for their activities. The institutional unit normally coincides with a body corporate, e.g. a limited liability company or legal person.
• Economic items can either be real resources, i.e. goods and services, or financial items representing various claims and liabilities.
• The basic criterion for entering a transaction in the BOP or a position in the IIP, is that it involves an exchange between a domestic entity (resident) and a foreign entity (non-resident). Residents are institutional units that engage and intend to continue to engage in economic activities and transactions within a country's territory, with one year or more serving as the conventional guideline.

Positions

Positions are shown as the value of a financial item which, for example, an enterprise is in possession of at a point in time. Financial objects can be, for example, shares, other securities or different types of loans. In principle, stocks must be registered at market value. See description of valuation below.

Transactions

A transaction should in principle be allocated to the period in which there is a change of ownership of the economic value. Conventionally, it is often said that a change of ownership has taken place when both parties of the transaction enters the transaction in their books or accounts. In the case of exports and imports of goods, it is the moment that the goods cross the border and are registered through customs declarations, that determines the time of recording of the transaction and consequently the change of ownership.

All transactions shall be valued at market prices. Market prices are defined as amounts of money that buyers pay to acquire something from sellers; the exchanges are made between independent parties and based on commercial considerations only. Total exports and total imports shall be recorded at free-on-board (f.o.b.) prices. F.o.b prices are the value when passing the border of the country of exports. On a detailed commodity level, cost-insurance-freight (c.i.f.) prices are used for imports, i.e. including transport and insurance costs up to the border of the importing country. The exchange rate on the transaction date or the average rate for the shortest period applicable shall be used for converting transactions in foreign currencies into the national currency. Stocks of assets and liabilities are to be valued at prices or rates in effect at the time to which the balance sheet relates.

Other changes

Income and expenditure are defined in the National Accounts and BoP excluding gains and losses, irrespective of whether they are realised or unrealised. Such items, however, help to explain total balance sheet changes that take place during a period and are registered on the account for revaluation.

Income and expenditure

Income and expenditure are defined in the National Accounts and BoP excluding gains and losses, irrespective of whether they are realised or unrealised. Such items, however, help to explain total balance sheet changes that take place in the course of a period and are registered on the account for revaluation.

Assets and liabilities

Assets and liabilities are the components of the balance sheets of the total economy and institutional sectors. In contrast to the accounts that show economic flows, a balance sheet shows the positions of assets and liabilities held at one point in time by each unit or sector or the economy as a whole.

An asset is a store of value representing a benefit or series of benefits accruing to the economic owner by holding or using the entity over a period of time. It is a means of carrying forward value from one accounting period to another.

A liability is established when one unit (the debtor) is obliged, under specific circumstances, to provide a payment or series of payments to another unit (the creditor).

Double entry bookkeeping

International Accounts are based on the rules for double entry bookkeeping. All transactions are represented by two entries, a credit and debit entry. Most transactions are those in which economic items are provided or received in exchange for other economic items, entailing that offsetting credit and debit entries will normally be registered.

For example, exports of a good will be registered in External Trade Statistics and recorded as a credit entry in the current account, whereas the accompanying increase in foreign assets, e.g. in the form of increased deposits abroad, is registered in financial account and recorded as a transaction on the debit side of the BOP accounts. In other cases when items are given away rather than exchanged, or a recording is one-sided for other reasons, there is only one recording in the data sources. In these cases, a counter entry is constructed, in this example in the form of a transfer so that the double entry requirement is satisfied.

Structure

The International Accounts is an integrated part of the National Accounts and is constructed as a mirror image of the institutional sector "Rest of the World" in the National Accounts. In the BOP and IIP, transactions and positions are seen from Norway's point of view, while in the institutional sector accounts they will be seen from the perspective of the rest of the world. A surplus on Norway's current account will in the National Accounts appear as a deficit for the sector "Rest of the World".

The BOP consists of three main parts: a current account, which shows current transactions with the rest of the world, a capital showing capital transactions, and a financial account, which records investment transactions in the form of purchases and sales of financial instruments.

The table below illustrates the statement of transactions and positions in the BoP and IIPs (eller IAs) current, capital and financial accounts:

1) Current account balance

Balance of goods and services
Balance of income and current transfers

2) Capital transfers to abroad, net

3) Net lending, current- and capital account

4) Financial account, assets/liabilities

Direct investment
Portfolio investment
Other investment
Reserve assets

5) Net lending, financial account

6) Errors and omissions

The financial statements are presented as shown in the following table, broken down by functions (direct investment, portfolio investment, other financial investment and international reserves):

7) The financial position of at the beginning of the reference period

8) Investments during period (asset)

9) Borrowing

10) Gains, losses and other changes (netto)

11) The financial position of at the end of the reference period

Following definitions applies

The relationship between current- and capital account and the transactions in the financial account:

1+ 2 =3

4 assets – 4 liabilities = 5

3 – 5 = 6

Consistent International Accounts requires:

(3) = (5)

The relationship between positions and change in positions in the financial account:

7 + 8 – 9 + 10 = 11

Description of the accounts

The definitional relationship between the current account and the financial account is that a current account surplus, adjusted for net capital transfers and net acquisitions of patents and copyrights etc, increases net foreign assets (or reduces net liabilities), while a deficit on the current account will reduce net assets (or increase net liabilities).

The current account comprises, first, exports and imports of goods and services, with the balance of goods and services as a balancing item. In addition, data are provided for compensation of employees, investment income and expenditure as well as current transfers to and from the rest of the world. The balance for this component is net income and current transfers. The total balance of the current account is the sum of the balances of these two components.

The capital and financial account shows how transactions recorded in the current account result in changes in foreign assets and liabilities, and in addition to purchases and sales of financial instruments includes capital transfers. This entails that the balance on the current account must be adjusted for net capital transfers in order to arrive at net lending.

The financial account also includes transactions that do not have a counter entry in the current account. One example would be a resident who uses funds in a foreign bank account to repay a loan raised abroad.

Net lending

Total asset transactions less total liability transactions result in net lending. By adjusting net lending for valuation changes and other balance sheet changes not caused by transactions, we arrive at changes in Norway's net foreign assets/liabilities.

Net lending, current account =
Current account balance + Capital transfers to abroad, net - non-financial net investment

Net lending, financial account = Net acquiring of financial assets – net borrowing

Net errors and omissions are derived from net lending from the two accounts and can be derived from the current account minus the same item derived from the financial accounts. Although the BoP accounts are, in principle, balanced, imbalances occur due to imperfections in source data and compilation.

In addition to the classifications and categories described in the international BOP, IIP and National Accounts manuals, it may be mentioned that the Norwegian BOP, IIP and National Accounts make use of the product classification CPA (Classification of Products by Activity) of the EU and sector of the BPM6, 2008 SNA and ESA 2010. For more details, please check https://www.ssb.no/en/klass/klassifikasjoner/39.

Country Codes are based on the International Standard ISO 3166.

Functional categories

Direct investment:

Direct investment is a cross-border financial investment made by an investor for the purpose of acquiring a lasting interest in a foreign enterprise, and exerting a degree of influence on that enterprise's operations. An investment by owning 20 per cent or more of the ordinary shares is considered always a direct investment. The establishment of a subsidiary abroad is an example of a direct investment.

Portfolio investment:

Portfolio investment covers transactions in equities, other securities, and financial derivatives, except where these transactions relate to direct investment or reserve assets category. The Government Pension Fund – Global is not part of the reserve assets, though it is owned by the government and administrated by Norges Bank. This is therefore treated as portfolio investment as concerns investment abroad. Most important are shares and other equities, bonds and money market instruments (certificates and Treasury bills).

Financial derivatives:

Financial derivatives positions are divided into assets and liabilities, while the trasaction figures are net and presented under assets.

Other investments:

Other financial investments is a residual category that covers all investments that are not included in direct investment, portfolio investments and international reserves.

Reserve assets:

Reserve assets consist of those external assets that are readily available to and controlled by monetary authorities for direct financing of payment imbalances, for indirectly regulating the magnitude of such imbalances through intervention in exchange markets to affect the currency exchange rate and /or other purposes. In Norway, Norges Bank have reserve assets. International reserves basically consist of assets only, i.e. any foreign central banks' holdings of assets in Norway (for instance Norwegian securities) are not considered "reserve liabilities", but as portfolio investment in Norway.

The classification of financial assets and liabilities:

The financial accounts include a limited number of financial instrument groups with detailed claims and debt items in the balance sheets of institutional units. The financial instrument links one entity claims to another sector’s debt items. The financial instruments are grouped in claim and debt items with similar economic functions. For example, the payment function is characteristic of coins, notes and salary accounts, while credit is procured through different types of loans. In addition, the liquidity ratio has been the determinant factor for the ranking of financial assets in the classification.

Classification of financial assets and liabilities in the financial accounts is based on the recommendations of the SNA 2008 and ESA 2010. The classifications are described below:

Equity and other shares:

The instrument includes ordinary shares in limited liability companies, shares in general partnerships and shares in mutual funds. Shares in foreign companies are also included. Furthermore, the instrument includes tradable Norwegian equity certificates and general government capital contributions in public enterprises and the state lending institutions.

Dept securities:

Comprise short and long-term securities. Short-term securities is defined as negotiable securities with original maturity of maximum one year, while long-term securities comprise instruments defined as tradable standardised debentures with original maturity of more than one year.

Currency and deposits:

Comprise Norwegian and foreign notes and coins, all types of deposits with commercial banks and savings banks, Norges Bank and foreign banks.

Loans:

This financial instrument includes lending forms other than tradable debentures and certificates. Short-term loans are mainly quantified on the basis of the specifications in accounting statistics for financial corporations. The instrument comprises building loans, factoring, bank overdrafts, operating and working credit. Long-term loans comprise all loans other than short-term loans (mortgage bond issues, other medium and long-term repayment loans and financial leasing).

Trade credits:

Financial claims arising from the direct extension of credit by suppliers and buyers for goods and services.

Financial derivatives

A financial derivative contract is a financial instrument that is linked to another specific financial instrument or indicator or commodity and through which specific financial risks (such as interest rate risk, foreign exchange risk, equity and commodity price risks, credit risks and so on,) can be traded in their own right in financial markets.

Insurance technical reserves:

The instrument includes individual insurance savings and group insurance savings in private life insurance companies and total capital in autonomous municipal and private pension funds. Prepayments of premiums and reserves against outstanding claims in non-life insurance companies are also included.

Other claims:

Comprise claims and debt that is due to differences in timing between transactions and payments. For example credit extended to a customer/supplier credit, deferred tax claims/liabilities. Included are also other financial items that do not belong to the previously listed instruments. Derivatives recorded in the accounting statistics are included.

Reserve assets/liabilities IMF:

The foreign exchange reserves and claims on the International Monetary Fund (IMF) together constitute Norges Bank's international reserves. Claims on the IMF consist of three components: SDR accounts (Special Drawing Rights), reserve positions in the IMF and loans to the IMF (Poverty Reduction and Growth Facility).

Valution

Market value:

Market prices are defined as amounts of money that willing buyers pay to acquire something from willing sellers; the exchanges are made between independent parties and on the basis of commercial considerations only. The exchange rate on the position date or the average rate for the shortest period applicable shall be used for converting positions in foreign currencies into the national currency. Stocks of assets and liabilities are to be valued at prices or rates in effect at the time to which the balance sheet relates.

Name: International accounts
Topic: External economy

Division for National Accounts

National level

Quarterly statistics. The first version for quarter k t is published after k+60 days, followed by revisions in the following quarterly publications. The final version is published in August/September year t+2.

Reporting to Eurostat, the International Monetary Fund (IMF), Organization for Economic Co-orporation and Development (OECD) and Bank for International Settlement (BIS).

Microdata are based on different sources

The purpose of the BOP and IIP Statistics is to provide reliable information on residents of Norway’s economic relationships with non-residents. The statistics are an integrated part of the National Accounts using the same principles and definitions.

The statistics is set to meet the international requirements given in the BPM. The international guidelines in BPM are revised during the last several years, with the latest update published in 2009 by the International Monetary Fund (IMF). The sixth edition of the manual, BPM6, is the current version and is implemented in the Norwegian BOP and IIP Statistics in December 2014. Back data based on the guidelines from BPM6 is implemented in both the current- and capital account and the financial account.

The current- and capital account has time series going back to 1981, while the financial account has time series going back to 2005 (BOP) and 2012 (IIP). The current- and capital account has time series going back to 1981.

The main users are international organizations, IMF, Eurostat, OECD and BIS. The Balance of Payments and the International investment position are used by market analytics within finance and the business sector in general, and by governmental agencies for economic policy purposes. Used in the National Accounts, the BOP and the IIP give an exact mirror image of the sector Rest of The World in the national Accounts.

No external users have access to the statistics and analyses before they are published and accessible simultaneously for all users on ssb.no at 08.00 am. Prior to this, a minimum of three months' advance notice is given in the Statistics Release Calendar. This is one of Statistics Norway’s key principles for ensuring that all users are treated equally.

The IIP and the BOP have the same principles and detailing levels. IIP shows the positions of assets and liabilities abroad each quarter. The positions together with the transactions, revaluations and other volume changes give a consistent picture of the financial part of the external sector.

Full integration with the National Accounts makes the Norwegian BOP and IIP data consistent with both the exports and the imports figures and financial figures for the Rest of the World Account of the National Accounts.

The BOP has a somewhat broader scope compared to the External Trade in Goods statistics. The main deviations are that BOP includes as exports goods delivered to non-resident carriers in Norwegian ports, goods other than oil and gas exported directly from the Norwegian continental shelf, imports of fuel to Norwegian carriers in foreign ports, and direct imports of goods to the Norwegian continental shelf. In addition, the BOP converts exports and imports of certain types of goods as registered in the external trade statistics into exports and imports of services.

A table of the external debt statistics can be found under “tables”. The external debt statistics is based on the guidelines in BPM6 and External Debt Statistics: Guide for Compilers and Users. The quarterly data from the IIP statistics is the basis of the external debt statistics. The gross external debt liabilities equals the debt liabilities in the IIP statement, i.e., total IIP liabilities excluding all equity (equity shares and other equity) and investment fund shares. The first level of disaggregation of the external debt is by institutional sector. The second level of disaggregation is by maturity of external debt, and the third level of disaggregation is by type of debt instrument.

In the BOP and IIP Statistics there is a classification on functional categories, one of them being direct investment. There is a separate annual statistics on Direct investment published by Statistics Norway. The two statistics follows different principles and will therefore show different figures. Statistics Norway also publishes Portfolio investment abroad, and the statistics follows the same international guidelines as the IIP.

The main part of the data is collected under the provisions of the Statistics Act and the Act on the Supervision of Credit Institutions, Insurance Companies and Securities Trading etc.

EU-regulations incorporated in the EEA-agreement define the scope of the statistics. The following regulations apply to the BOP and IIP -statistics:

• REGULATION (EC) No 184/2005 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 12 January 2005 on Community statistics concerning balance of payments, international trade in services and foreign direct investment
• COMMISSION REGULATION (EC) No 1055/2008 of 27 October 2008 implementing Regulation (EC) No 184/2005 of the European Parliament and of the Council, as regards quality criteria and quality reporting for balance of payments statistics
• COMMISSION REGULATION (EU) No 1227/2010 of 20 December 2010 amending Regulation (EC) No 1055/2008 implementing Regulation (EC) No 184/2005 of the European Parliament and of the Council, as regards quality criteria and quality reporting for balance of payments statistics
• COMMISSION REGULATION (EU) No 555/2012 of 22 June 2012 amending Regulation (EC) No 184/2005 of the European Parliament and of the Council on Community statistics concerning balance of payments, international trade in services and foreign direct investment, as regards the update of data requirements and definitions
• REGULATION (EC) No 716/2007 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 20 June 2007 on Community statistics on the structure and activity of foreign affiliates

The scope of the Balance of Payments and International investment position is defined in international guidelines in the Balance of Payments and International Investment Position Manual (BPM6), System of National Accounts (2008 SNA, published by the UN, OECD, IMF, World Bank and the European Commission) and the European System of National and Regional Accounts (ESA 2010).

Like the National Accounts, the IIP and BOP accounts are constructed around three basic concepts: statistical units, economic values and transactions. Briefly, the accounting systems describe transactions between statistical units in which economic values are provided or received in exchange for other economic values. The Balance of Payments shall in principle include all transactions between unit’s resident of the Norwegian economic territory and non-resident units. See below for more about the sample that’s behind the BoP statistics.

The delineation of the economy towards the rest of the world is based on the concept of resident units. A unit is a resident unit when it has a centre of economic interest in the economic territory in question, i.e. when it is engaged in economic activity in a territory for a long period of time (at least one year).

The Norwegian economic territory includes mainland Norway together with the Norwegian part of the Continental Shelf, Svalbard and Jan Mayen with Bjørnøya.

The BOP and IIP statistics are based on data collected by other divisions in Statistics Norway.

The main sources for the current- and capital account;

• External trade in goods
• Petroleum Statistics
• Sample survey, non-financial enterprises,non-financial corporations and financial institutions not under supervision
• Structural Business Statistics, Ocean Transport
• Annual accounting statistics for the general government.
• Quarterly accounting statistics for financial corporations under supervision
• Travel survey

The main sources for the financial account;

• Quarterly accounting statistics for financial corporations under supervision. Positions are reported and some transactions (equity, other debt securities and loans) and some revaluations (exchange rate changes and other price changes) quarterly and annually.
• Quarterly accounting statistics for non-financial corporations and financial institutions not under supervision. Positions and revaluations are reported quarterly and annually.
• Annual accounting statistics for the general government. Positions and revaluations (exchange rate changes and other price changes) are reported.
• Quarterly data from the Norwegian Central Securities Depository (VPS) and data from a separate survey on mutual funds. Positions and transactions are reported.

Data collected for non-financial corporations and mutual funds are based on sample surveys. See each survey for more information on sampling, for example sample survey and how to choose the sample. For areas with incomplete statistical coverage, it is necessary to do estimations or use supplementary sources such as tax returns.

All major Norwegian financial and non-financial enterprises are covered in the BOP and IIP-statistics.

For most of the BOP and IIP items the figures used are as shown in the primary sources, as mentioned in the “Data source and sampling” section. Others are derived through estimations of which the most important are:

Current account

Services and income flows are estimated on quarterly basis by using the change as observed in the sampling survey data combined with last known annual totals. This estimation procedure is the same used in Quarterly National Accounts.

Reinvestment of earnings

Reinvestment of earnings is included in both the current and financial account. Reinvestment of earnings arising from a direct investor’s equity in its direct investment enterprise is calculated based on accounting variables profit and dividends.

Financial account

Financial transactions are to a large extent estimated starting with observed investment positions. The definitional identity employed is: opening position + transactions + revaluations = closing position.

Most of the revaluations due to exchange rate movements are estimated combining exchange rates and information on foreign currencies in use for different variables.

The household’s holiday houses abroad are estimated based on tax information. Price changes and exchange rates are estimated from information from various countries.

The non-financial enterprises and financial institutions not under supervision are based on a quarterly sample survey. This covers the major enterprises in the population and has a sample size of 500-600 enterprises. Quarterly numbers are then grossed up with figures from the annual BoP and IIP reporting that has a sample size of 3,000 enterprises. This is done by adding the enterprises only included in yearly survey to the fourth quarter and are then copied the following three quarters. These enterprises represent approximately ten percent of non-financial enterprises' total assets and liabilities.

Not relevant

Statistics Norway's standard rules for confidentiality are applied

Statistics Norway has adapted the international recommendations for compiling BOP and IIP statistics and is therefore comparable with other countries' BOP and IIP statistics. Annual and quarterly current account data on a consistent form are available back to 1981 in the Statbank. Correspondingly for the financial account back to 2005. Quarterly IIP data on a consistent form are available back to 2012 in the Statbank. The data has had several changes due to the new manuals BPM6 and ESA2010 and which has led to minor breaks in the time series. Longer times series for annual IIP data are available back to 1998 based on BPM5 guidelines. Longer times series for annual and quarterly current account data are available back to 1970. Correspondingly for the financial account back to 1981. For the period 1994 - 2004 monthly data for both current and financial account are available. An historic table for Balance of Payments is available back to 1949, see 22.8 and 22.9.

The Norwegian BOP and IIP Statistics makes use of information from a great variety of statistical sources and will reflect uncertainty and errors which might appear in these sources. However, the fact that IIP is a logical system within an even larger logical system of the National Accounts, it is possible to carry out a range of consistency checks to counterbalance the initial collection and then processing errors of the primary sources.

Preliminary quarterly and annual figures are revised until final annual figures are published (in August/September year t+2). See Administrative information, Frequency and Timeliness.

In addition, periodical main revisions give revised figures. A main revision of the BoP time series were conducted in December 2014 with the implementation of the new manuals Balance of Payments and International Investment Position (BPM6) and European system of national Accounts (ESA2010). The BoP financial account has revised its time series back to 2005.