- Source: IMF (all countries) and BEA (US bilaterals).
- Units: Millions (smaller economies ) or Billions (large economies). Specified in the notes.
- BOP files are balance of payments in “Standard Presentation.”
- BMP6 : CA + Capital Account – FA + EO = 0
- The capital account is in a separate line, following standard IMF presentation.
- The “Change in Reserves” is inside the Financial Account in the “Standard” presentation. The IMF has an alternative “Analytical Presentation” where the reserves are outside the FA, which also changes the FA balance.
- Country names that cannot be automatically standardized have the original iso2 or iso3 code in the file name.
- BMP6 : CA + Capital Account – FA + EO = 0
- The word file contains the last 10 years of data. The Excel goes further back in time.
- The US-BOP-Bilaterals subfolder has bilateral BOPs between the US and other important trading partners. This data comes from the US Bureau of Economic Analysis (BEA). Errors and omissions tend to be large because the bilateral financial account is harder to measure (BEA calls this line the “statistical discrepancy”)
Notes on the Balance of Payments
The Balance of Payments (BOP) is a statistical statement that summarizes transactions between residents and nonresidents during a period of time. The BOP Manual, sixth edition (BPM6), is a standard framework formulated by the International Monetary Fund (IMF) to provide guidelines for compiling and presenting BOPs. Under the double-entry accounting system that underlies the balance of payments, each transaction is recorded as consisting of two entries, and the sum of those entries must satisfy this equation:
Current Account + Capital Account – Financial Account + Errors & Omissions = 0
Here’s a summary of the main components of the BPM6 format in the balance of payments:
Current Account (CA):
Goods: This includes general merchandise, goods for processing, repairs on goods, goods procured in ports, and nonmonetary gold.
Services: This encompasses categories like transportation, travel, telecommunications, computer and information services, financial services and other services.
Primary Income: This includes dividends and investment returns (from direct investment, portfolio investment, and other investments). More generally, this account shows amounts payable and receivable in return for providing temporary use to another entity of financial resources, labor, nonfinancial assets.
Secondary Income: This includes transfers like workers’ remittances and government aid.
Capital Account (KA): This includes debt forgiveness, capital transfers, and the acquisition/disposal of non-produced, non-financial assets like land to embassies. It is typically a negligible amount.
Financial Account (FA):
Direct Investment: This refers to equity and debt transactions between direct investors and their foreign entities. In general, a direct investment is assumed when the foreign investor holds at least 10% of the voting power in the firm, which typically implies a degree of influence or control over the management. This threshold is a guideline to distinguish direct investment from portfolio investment.
Portfolio Investment: Transactions related to equity (stocks) and debt securities (bonds) not classified under direct investment.
Financial Derivatives (other than reserves): This includes structured financial instruments such as forwards, futures, options, swaps, and credit derivatives.
Other Investment: This includes trade credits, bank deposits and foreign currency (not held by the central bank).
Reserve Assets: Comprising Central Bank holdings of monetary gold, special drawing rights, reserve position in the IMF, and foreign exchange.
Net Error and Omissions (E&O): Residual account that captures imperfections in source data and compilation. It tends to be higher in the last year of available data (delays in data processing). It can also be high due to unrecorded capital flight, where only part of a transaction is recorded. For example, when people take foreign currency out of the country in suitcases, the statisticians might see a decline in central bank foreign reserves but no increase in assets holdings abroad.
When recording transactions inside each subaccount, a + means there is an increase in the activities or assets included in that account. A – means that there is a decrease in the activities or assets in that subaccount. The amounts in each account at then added and subtracted to obtain net values (exports and assets are added, imports and liabilities are subtracted). Finally, these net amounts are added or subtracted according to the BOP equation above.
For example, if a company in Argentina exports soybeans valued at USD 100 and is paid with USD bills, the BOP of Argentina (measured in USD) would record two transactions: a) A +100 increase in exports of goods in the current account (CA) and b) A $100 increase in the assets of “Other Investments” inside the financial account (FA). If the company exchanges the USD at the Central Bank within that year, part b) would be reflected instead a $100 increase in “Change in Reserves”. If the company used the USD to pay down debt it had with a foreign supplier within that year, part b) would be reflected instead as a $100 decrease in the liabilities of “Other Investments”, which on net is again an increase in “Other Investments”. Using the BOP equation, the +100 in the CA – (+100 ) in the FA = 0.
More generally, note that a surplus in the CA generally means that the country is a net exporter of goods and services, while a surplus in the FA generally means that the country is accumulating assets (or reducing liabilities) from the rest of the world. The BOP equation implies that a country with a surplus in the CA must have a surplus in the financial account, because the net exports are being paid by the rest of the world with foreign assets. Conversely, if a country is importing more than it exports (CA deficit), it must be paying the rest of the world with a deficit in the FA, either by incurring in more liabilities or selling some foreign assets. The only case where this might not be true is when the capital account (KA) or Errors and Omissions (E&O) are the counterpart in the transaction.