EAC Statistics E-Learning Resources · External Sector Statistics: Balance of Payments & IIP
EAC Statistics E-Learning Resources
A comprehensive, BPM7-based course on the external accounts — from the conceptual framework and accounting rules, through the current, capital and financial accounts, to the International Investment Position. Built for compilers, analysts and users across the East African Community.
This programme follows the Integrated Balance of Payments and International Investment Position Manual, Seventh Edition (BPM7), released by the IMF in March 2025 and aligned with SNA 2025. Across five modules it builds a complete picture of how transactions and positions between residents and nonresidents are structured, measured, recorded and interpreted — with worked examples, interactive checks and a final assessment.
The external accounts, the BPM7 manual, the accounting rules, and the units and sectors behind every entry.
Goods, services, earned income and transfer income — with the 17 services, the GATS modes and double-entry recording.
Capital transfers and nonproduced assets; the five functional categories, instruments, sectors and maturity.
The stock counterpart of the BOP — net creditor or debtor, the integrated IIP, and how to read the balances.
Knowledge checks and drag-and-drop activities in every module reinforce each concept as you go.
A shuffled final assessment from a 36-question bank, with a downloadable certificate on success.
Registration is optional to browse the modules — it's required only for the final assessment and certificate.
For inquires, email us on statistics.inquiries@eachq.org
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BOP & IIP · work through the modules, then take the final assessment
Work through the five modules in order. Each opens with its objectives, develops the concepts with definitions, tables, diagrams and knowledge checks, and closes with a summary. A final assessment draws on all five modules; pass it to earn your certificate.
How transactions and positions between residents and nonresidents are structured, measured and recorded under BPM7.
Goods, services, earned income and transfer income — the flows that drive the current-account balance.
Capital transfers and nonproduced nonfinancial assets — and how the current and capital balances give net lending or borrowing.
How an economy finances a current-account deficit or invests a surplus — by functional category, instrument, sector and maturity.
The stock statement of external assets and liabilities — and what the net IIP says about a country's position with the world.
A shuffled set drawn from a large question bank — pass to earn your EAC certificate.
How transactions and positions between residents and nonresidents are structured, measured and recorded under BPM7.
This module introduces the conceptual framework of the external accounts as presented in the Integrated Balance of Payments and International Investment Position Manual, Seventh Edition (BPM7). It provides a foundation for understanding how economic transactions and positions between residents and nonresidents are structured, measured, and recorded. The framework is essential for producing coherent, internationally comparable statistics and supports deeper analysis of a country's economic relationships with the rest of the world. It also discusses the main reasons for the recent revision of the BPM6.
The external accounts summarise the economic relationships between the residents of an economy and nonresidents. Before going further, it helps to fix the two central statements they produce — the Balance of Payments and the International Investment Position.
The seventh edition of the Integrated Balance of Payments and International Investment Position Manual (BPM7, the Manual) is the current standard framework for compiling statistics on the positions, transactions, and other changes in financial assets and liabilities between an economy and the rest of the world. The framework was released by the IMF in March 2025.
BPM7 is complemented by the Coordinated Direct Investment Survey Guide, the Coordinated Portfolio Investment Survey Guide, the International Reserves and Foreign Currency Liquidity Guidelines for a Data Template, and the External Debt Statistics Guide for Compilers and Users. In the region, the EAC Guidelines for the compilation of BOP/IIP statistics are also used by compilers, with the aim of producing harmonised statistics across the Community.
The BPM7 framework enables countries to compile internationally comparable statistics that are essential for monitoring external-sector sustainability, evaluating policy impacts, and supporting global surveillance. By providing detailed guidance on classification, measurement, and data quality, the BPM7 conceptual framework serves as a critical foundation for producing high-quality, relevant, and transparent external-sector statistics.
The external accounts are composed of three major interconnected elements: (a) the Balance of Payments (BOP); (b) the International Investment Position (IIP); and (c) the other changes in financial assets and liabilities accounts. Each element is interlinked with the others.
The BOP has three main accounts: the current account, the capital account and the financial account. Each is examined in detail in the modules that follow.
External-account entries take the form of flows and stocks/positions.
The integrated IIP statement presents values at two points in time — the beginning and end of a period — and reconciles the change between them. The change results from two main sources: transactions recorded in the financial account of the BOP, and other changes in financial assets and liabilities (revaluations such as price or exchange-rate changes, and other volume changes such as write-offs or reclassifications). The closing position is therefore the opening position plus all flows in the period.
| Component | Details |
|---|---|
| Opening IIP | Value of external financial assets and liabilities at the start of the period. |
| + Transactions (BOP financial account) | Changes from cross-border financial flows in the current period. |
| ± Revaluations | Exchange-rate changes (currency fluctuations) and other price changes (market prices). |
| ± Other volume changes | Cancellations and write-offs of debt, and reclassifications of instruments. |
| Closing IIP | Updated value of external assets and liabilities at the end of the period. |
A recurring question from users is why the manual changed. Understanding the drivers of the revision helps explain the new terminology and classifications you will meet throughout the course.
The revision of the Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6) began in 2020, under the leadership of the IMF's Balance of Payments Committee (BOPCOM). The updated version, BPM7, was officially released in March 2025. The revision was closely aligned with the update of the System of National Accounts (resulting in SNA 2025) to ensure consistency across macroeconomic statistics.
Flows and positions between residents and nonresidents that appear in the national accounts, monetary and financial statistics, and government finance statistics correspond exactly to external-accounts items. Consistency means the same economic reality is recorded identically across frameworks, which makes the statistics coherent and analytically powerful.
Items in the external debt statistics (EDS) should be consistent with the relevant IIP liabilities:
| External Debt Statistics (EDS) | IIP liabilities |
|---|---|
| DI: intercompany lending | Direct investment — debt instruments |
| Debt securities | Portfolio investment — debt securities |
| Currency and deposits | Other investment — currency and deposits |
| Loans | Other investment — loans |
| Trade credit and advances | Other investment — trade credit and advances |
| Other debt liabilities | Other investment — insurance, pension and standardized guarantee schemes; and other accounts payable |
| SDR allocations | Other investment — SDR allocations |
Every data source is assessed against eight data-quality criteria:
| Criterion | Key question | Why it matters |
|---|---|---|
| 1. Relevance | Does the source provide the required data items and breakdowns? | Ensures alignment with BPM7 concepts and compilation needs. |
| 2. Accuracy & reliability | Is the data based on actual transactions? Can it be verified? | Enhances confidence in the data's quality and precision. |
| 3. Timeliness | Is the data available within the required time frame (e.g. quarterly)? | Supports timely compilation and publication. |
| 4. Consistency & comparability | Is the source harmonised with international standards and other datasets? | Enables integration with other statistics (e.g. SNA, trade data). |
| 5. Accessibility & cost | Is the source easy to access and cost-effective to obtain? | Facilitates regular and sustainable use. |
| 6. Coverage | Does it cover all sectors (households, corporates, government)? | Ensures completeness of the BOP/IIP accounts. |
| 7. Stability & continuity | Is the source available regularly and part of an ongoing system? | Supports time-series analysis and monitoring. |
| 8. Confidentiality & legal compliance | Are data-protection laws and respondent confidentiality upheld? | Ensures ethical and legal use of the data. |
Quadruple accounting is the basic framework, derived from bookkeeping principles. A single transaction gives rise to two entries for each party, leading to four entries in total. Three booking principles can be distinguished.
In the current and capital accounts, a credit/revenue records exports of goods and services, earned income receivable, transfers receivable, and disposals of nonproduced nonfinancial assets; a debit/expenditure records imports, earned income payable, transfers payable, and acquisitions of nonproduced nonfinancial assets. In transactions involving financial assets and liabilities, the terms net acquisition of financial assets (NAFA) and net incurrence of liabilities (NIL) are used: a positive change is an increase and a negative change a decrease.
A clear distinction must be made between stocks (recorded in the balance sheet at a point in time) and flows (aggregations of individual transactions over an accounting period). The timing rules are:
Exchange (market) prices are the basis for valuing transactions in the external accounts. The market price is the current value at which goods, services, labour, or assets are exchanged — or could be exchanged — for cash between willing buyers and willing sellers.
The main attributes of a unit are that it can own goods or assets in its own right and exchange their ownership; it can take economic decisions and engage in economic activities for which it is itself responsible and accountable at law; it can incur liabilities, take on obligations or future commitments, and enter into contracts; and a complete set of accounts, including a balance sheet, can be compiled for it. Two main types qualify: persons or groups of persons in the form of households, and legal or social entities.
The residence of an institutional unit is the economic territory with which it has the strongest connection — its centre of predominant economic interest. The most commonly used concept of economic territory is the area under the effective economic control of a single government. In general, a unit is resident in one and only one economic territory.
Similar institutional units are grouped, according to their principal functions, behaviour and objectives, into five institutional sectors:
| Sector | What it comprises |
|---|---|
| Nonfinancial corporations | Units whose principal activity is producing market goods or nonfinancial services, including market NPIs such as fee-charging hospitals, schools or colleges that recover their production cost. |
| Financial corporations | The central bank and all resident corporations engaged in financial services — banks, insurance, pension funds, and units facilitating financial intermediation. |
| General government | Central, state and local government units together with social security funds, plus all nonmarket producers controlled by government units or social security funds. |
| Nonprofit institutions serving households (NPISH) | All resident NPIs, except those controlled by government, that provide nonmarket goods or services to households or the community. |
| Households | All resident households, including institutional households (people in hospitals, retirement homes, convents, prisons, etc. for long periods). |
Goods, services, earned income and transfer income — the flows that drive the current-account balance.
This module introduces the current account of the Balance of Payments (BOP) and its key components. The current account records the flow of transactions between residents and non-residents involving goods, services, income, and current transfers. It comprises three main sub-accounts: the Goods and Services account, the Earned Income account (formerly called Primary Income), and the Transfer Income account (formerly called Secondary Income). The overall result is reflected in the current-account balance, which shows a surplus (if credits exceed debits) or a deficit (if debits exceed credits).
The current account records flows of goods, services, income and current transfers between residents and non-residents, and its balance can show a surplus or a deficit. We begin with goods.
Goods are physical, produced objects over which ownership rights can be established and transferred between institutional units through market transactions. (Electricity, although not a physical object, is shown in the goods account.) The broad structure of the goods account is:
| Goods account | Exports (credits) | Imports (debits) |
|---|---|---|
| General merchandise on a BOP basis of which: re-exports; goods traded within a global manufacturing arrangement | ● | ● |
| Net exports of goods under merchanting goods acquired under merchanting (negative exports); goods sold under merchanting (exports) | ● | n.a. |
| Nonmonetary gold | ● | ● |
| Total goods | ● | ● |
| Balance on international trade in goods | Exports − imports | |
The primary source is International Merchandise Trade Statistics (IMTS), which record goods that add to or subtract from the stock of material resources of a country by entering (imports) or leaving (exports) its economic territory.
IMTS data may need adjusting to align with BOP concepts on four dimensions:
| Adjustment | What it involves |
|---|---|
| Coverage | Include items not captured by customs (electricity, goods procured in ports, informal cross-border trade); exclude items with no change of ownership (transit goods, migrants' effects, goods consigned to embassies, temporary imports/exports, returned goods, samples of no commercial value, goods for processing); include unissued bank notes/coins, electricity, gas, oil and water, goods procured from ports, illegal/smuggled goods, gifts in kind and humanitarian aid in the form of goods. |
| Timing | Align timing with the change of economic ownership, not necessarily when goods cross the border. |
| Valuation | Convert customs values (usually FOB or CIF) to values consistent with BOP standards (an FOB/FOB basis). |
| Classification | Reclassify goods according to BOP categories, not customs tariff lines. |
General merchandise is valued at the market price at the point of uniform valuation — the exporter's border, including insurance and freight up to the point the goods leave the exporting economy (an FOB-type valuation). IMTS use FOB for exports and CIF for imports; for BOP, imports on a CIF basis are converted to FOB by deducting freight and insurance incurred from the exporting frontier to the importing border.
For goods under merchanting there is no substantial transformation of the good; the good is valued at the transaction prices agreed by the parties (not FOB); and the recording as merchanting appears only in the BOP of the economy where the merchant is resident — for other economies it is recorded under general merchandise. The acquisition of goods by the merchant is recorded as a negative export within merchanting, and the sale as a positive export of the merchant's economy. Both legs are recorded in the merchant's economy.
Nonmonetary gold is shown separately from other goods because of gold's special role in financial markets, because sales and purchases largely relate to existing stocks, and because values may be particularly large (e.g. in gold-dealing centres).
A significant share of external transactions in goods occurs within global manufacturing arrangements, whereby a principal manufacturer outsources the transformation of goods to a nonresident — possibly affiliated — manufacturing unit. Two arrangements have emerged, distinguished by who owns the material inputs and the intellectual property:
| Arrangement | Ownership of inputs / IP |
|---|---|
| Processing arrangement | The principal owns all or most of the material inputs. Because ownership of the goods does not change, the processor's fee is recorded under manufacturing services, not goods. |
| Factoryless goods production | The principal may provide some material inputs but must supply the intellectual property or know-how (without receiving payment for its use) that goes into the manufacturing process. |
General merchandise trade statistics and goods on a BOP basis are different but reconcilable; the differences arise from methodological differences in source, coverage, classification, valuation and timing. Good practice is to reconcile the two datasets and publish the reconciliation at least annually, which ensures transparency and avoids confusion.
Yes. Informal trade in goods involves frequent small-scale movements across borders, including shuttle trade and the smuggling of legal goods by informal units. If an informal worker carries goods over the border for a formal enterprise, the change of ownership is between a formal (resident) unit and a nonresident unit. Data collection at border stations is encouraged. Informal activities include informal trade in goods and services (exports and imports); room rentals, ride services and informal dining for travellers; cross-border services such as hairdressing or construction by unregistered self-employed individuals; online services such as informal tutoring; informal employment of nonresident workers; and remittances linked to the informal economy. Undeclared trade by formal units is not part of the informal economy but may be classified as nonobserved international trade.
A single transaction in the BOP consists of two entries of equal value and opposite sign, following the double-entry rule. Conceptually the sum of entries is zero — the accounts as a whole are in balance.
When Country A imports a motor vehicle valued at 100, the transaction is recorded as a debit of 100 in the current account under goods imports, while the corresponding payment reduces foreign currency and deposits by 100, shown as a decrease in the financial account's net acquisition of financial assets (NAFA). Together these entries balance: credits minus debits equal zero, the financial account mirrors the current-account transaction, and the statistical discrepancy remains zero — so the overall Balance of Payments identity holds.
| Account | Credit (exports) / NAFA | Debit (imports) / NIL | Balance |
|---|---|---|---|
| Current account — goods (imports) | — | 100 | −100 (CA) |
| Capital account | — | — | 0 (KA) |
| Financial account — currency & deposits | −100 (NAFA) | — | −100 (FA) |
| Statistical discrepancy | SD = FA − CA − KA = −100 − (−100) − 0 | 0 | |
Classification is mainly product-based (by the type of service rendered, not the unit providing it) — for example, if a bank provides pension-fund services as a secondary activity, the service is classified as pension-fund services. It is transactor-based for travel, construction, and government goods and services n.i.e.
The General Agreement on Trade in Services (GATS) identifies four modes of supply, based on the respective location of the supplier and the consumer when the service is rendered.
No. Services in GATS Modes 1, 2 and 4 are generally a subset of the services account. However, goods included in parts of travel, construction, and government goods and services n.i.e. are not part of any mode. Crucially, GATS Mode 3 — resident-to-resident sales through a locally established branch or controlled affiliate of a nonresident — is not part of the services account.
BPM7 has 17 main standard service categories — five more than BPM6. A brief composition of each follows:
BPM7 has 17 first-level categories (five more than BPM6); descriptions were updated to reflect CPC version 3.0; the BPM6 "telecommunication, computer and information services" category is split into telecommunication services and computer and information services; and the BPM6 "other business services" category is split into five — research and development; professional and management consulting; nonfinancial intermediation; operating leasing; and technical, environmental and other business services. The expanded scope of computer services now includes cloud computing; services of AI systems and of miners/validators of crypto-asset transactions; staking, cloud and pooled mining of crypto assets; and software facilitating online meetings and video conferencing.
Goods and services flows are recorded in the current account; their corresponding entries may appear in the financial, current or capital account depending on the nature and timing of the transaction. If payment is simultaneous, the corresponding entry is in the financial account (e.g. currency and deposits). If payment is before/after the change of ownership, a trade advance/credit or other instrument is recorded. In barter, the corresponding entry is in goods, services or the capital account; for aid or gifts, the corresponding entry is under transfer income or the capital account.
Earned income receivable by the compiling economy is a credit; earned income payable is a debit. The balance on earned income is net earned income receivable (receivable less payable). Possible data sources are the international transaction reporting system; surveys (of enterprises, travellers, embassies and international organisations); and administrative sources.
Whereas earned income affects national income, transfer income together with earned income affects gross national disposable income. Capital transfers do not affect disposable income and are recorded in the capital account.
Every transaction is either an exchange or a transfer.
| Exchange vs Transfer | Definition | Return expected? | Examples |
|---|---|---|---|
| Exchange | Mutual provision of something of economic value | Yes | Export of goods, payment for services |
| Transfer | One-way provision without direct return | No | Foreign aid, remittances, debt forgiveness |
Every transfer still yields two entries for each party, even though nothing is received in return:
It is the balance of current transactions — goods and services, earned income and transfer income — between residents and nonresidents. The term current-account balance is used in the external accounts and is expressed from the perspective of resident units; the national accounts use current external balance, expressed from the nonresidents' perspective and therefore with the opposite sign. The balance can be a surplus (positive) or a deficit (negative).
| Current account | Credit (exports) | Debit (imports) |
|---|---|---|
| Goods; services; earned income; transfer income | Recorded with a positive sign (+) | Recorded with a positive sign (+) |
| Balance | What it means | Implications |
|---|---|---|
| Surplus (exports > imports) | The country earns more from exports and income receivable than it spends on imports and income payable. | May indicate strong export performance. |
| Deficit (exports < imports) | The country spends more on imports and income payable than it earns. | May indicate high import dependence. |
| Balanced (≈ 0) | Exports roughly equal imports. | External transactions are in equilibrium. |
Capital transfers and nonproduced nonfinancial assets — and how the current and capital balances give net lending or borrowing.
The capital account of the external accounts shows (a) capital transfers receivable and payable between residents and nonresidents and (b) the acquisition and disposal of nonproduced nonfinancial assets between residents and nonresidents. The capital account is designed to be consistent with the SNA capital account, though the SNA capital account shows capital formation for the full range of produced and nonproduced assets.
The capital account records capital transfers and the acquisition and disposal of nonproduced nonfinancial assets between residents and nonresidents. We start with the full definition of a capital transfer.
Specifically, a transfer is classified as a capital transfer if it meets any of the following conditions:
Unrequited — there is no exchange of goods, services, or financial assets in return. And typically non-recurring — capital transfers are linked to capital formation or asset restructuring.
The capital account in the external accounts shows two components: the acquisition and disposal of nonproduced nonfinancial assets between residents and nonresidents, and capital transfers receivable and payable between residents and nonresidents.
Capital transfers are unrequited transactions relating to the acquisition or disposal of assets (excluding cash and inventories) or the forgiveness of liabilities. Five key categories arise in the Balance of Payments.
| Type of capital transfer | Description | Example |
|---|---|---|
| Debt forgiveness | Cancellation of debt by creditor | Creditor waives $10M loan |
| Exceptional insurance claims | Catastrophic payouts, e.g. after disasters | Earthquake/hurricane payout |
| Capital taxes | Infrequent asset- or wealth-based taxes | Estate/inheritance tax |
| Investment grants | Grants for capital formation | School construction funding |
| One-off guarantees | Guarantee is called, no claim acquired | Government pays a guaranteed loan |
Distinguishing capital from current transfers is central to placing a transaction in the right account.
The capital-account balance shows the net result of capital transfers and the acquisition/disposal of nonproduced nonfinancial assets between residents and nonresidents.
| Capital-account balance | Interpretation |
|---|---|
| Positive (+) | The economy received more capital transfers or asset sales than it paid out. It is a surplus. |
| Negative (−) | The economy made more transfers or purchases of nonproduced assets abroad. It is a deficit. |
Current-account balance + capital-account balance = net lending (surplus) / net borrowing (deficit). The financial account then records how that net lending or borrowing is financed.
How an economy finances a current-account deficit or invests a surplus — by functional category, instrument, sector and maturity.
The financial account records all transactions that involve changes in ownership of financial assets and liabilities between residents and nonresidents of an economy. It captures the flows related to the acquisition and disposal of financial assets abroad, as well as the incurrence of liabilities from the rest of the world. These transactions reflect how an economy finances its current-account deficit or invests its current-account surplus, providing insights into external financing and investment behaviour. The financial account is classified by financial instrument (equity and debt instruments) and by functional category.
The financial account records all cross-border changes in the ownership of financial assets and liabilities. Its entries can correspond to entries in the goods, services, income or capital accounts, or to other financial-account entries — for example, the corresponding entry for an export of goods is usually an increase in financial assets such as currency and deposits or trade credit.
The financial account is classified along four dimensions:
Included: equity securities held for less than 10% of voting power; investment fund shares/units in the form of securities (not reserve assets); and debt securities. Note: even if an investor owns 10% or more of a fund, investment fund shares are still portfolio investment, unless they are not in the form of securities or are reserve assets.
Excluded: direct-investment equity (≥ 10% voting power); equity not in the form of securities; financial derivatives (separate category); shares in hedge/private-equity/venture-capital funds not issued as securities; and securities held by monetary authorities that qualify as reserve assets.
Purpose: risk transfer, not the supply of funds or capital. Income: none accrues (no interest or dividends); gains and losses are recorded as revaluations in the other changes account. Reserves: derivatives used in reserve-asset management are excluded here and recorded under reserve assets.
A residual category capturing cross-border transactions and positions not classified under direct investment, portfolio investment, financial derivatives/ESOs, or reserve assets.
| Component | Description | Includes / examples |
|---|---|---|
| Other equity & equity in international organizations | Non-securitised equity not classified as direct or portfolio investment | Shares in currency-union central banks; equity in the Bank for International Settlements |
| Currency and deposits | Holdings of currency and bank-account balances | Resident and non-resident bank deposits; notional cash-pooling arrangements |
| Loans | Lending and borrowing under contractual agreements | IMF credit and use of IMF resources; bilateral and multilateral loans |
| Insurance, pension & standardized guarantee schemes | Liabilities and entitlements of insurance and pension systems | Life and non-life technical reserves; annuities; pension entitlements; guarantee-scheme reserves |
| Trade credit and advances | Credit extended for trade in goods and services | Trade receivables/payables; prepayments and deferred payments |
| Other accounts receivable/payable | Miscellaneous claims and liabilities not classified elsewhere | Accrued income and expenses; taxes and dividends payable/receivable |
| Special Drawing Rights (SDRs) | International reserve asset created by the IMF | SDR allocations recorded as liabilities; SDR holdings recorded as reserve assets |
Criteria to qualify: control by the monetary authorities; immediate availability without restriction; denomination and settlement in convertible foreign currency; and high liquidity/marketability. Components are monetary gold; SDRs (holdings); the reserve position in the IMF; other reserve assets (currency and deposits, debt securities, equity and investment fund shares); financial derivatives related to reserve management (net, at market value); and other claims. Excluded: assets not readily usable or not under control; long-term investments abroad; encumbered assets; derivatives unrelated to reserve management; and SDR allocations (they are liabilities).
The financial account also classifies transactions by the type of financial instrument used. Instruments fall into two broad groups: equity and investment fund shares, and debt instruments.
| Transaction | Recorded under |
|---|---|
| A foreign investor buys 8% of the shares in a Kenyan bank | Portfolio investment |
| A parent company acquires 60% of a foreign subsidiary | Direct investment |
| An investor buys units in a cross-border money-market fund | Portfolio investment |
Debt instruments are financial claims that require the borrower to repay principal and/or interest. The key types are:
The financial account also captures the institutional sector involved in each cross-border financial transaction, which helps analyse who in the economy is engaging in international financial flows. The sectors are:
| # | Institutional sector |
|---|---|
| 1 | Central bank |
| 2 | Deposit-taking corporations, except the central bank |
| 3 | General government |
| 4 | Other financial corporations |
| 5 | Nonfinancial corporations |
| 6 | Households and non-profit institutions serving households |
Maturity may relate to original maturity (the period from the issue date to the final contractually scheduled payment) or remaining/residual maturity (the period from the reference date to the final scheduled payment).
| Functional category | Possible data sources |
|---|---|
| Direct investment | Surveys of firms with foreign transactions; enterprise financial statements; administrative records (e.g. investment approvals); ITRS; Coordinated Direct Investment Survey (CDIS). |
| Portfolio investment | Surveys; custodian and depository data; stock-exchange records; administrative data (pension funds, insurance firms); monetary and financial statistics; ITRS; Coordinated Portfolio Investment Survey (CPIS). |
| Financial derivatives | Reports from financial institutions; surveys of major market participants; trading platforms and clearinghouses; monetary and financial statistics. |
| Other investment | Monetary and financial statistics on cross-border transactions; ITRS; surveys of enterprises with foreign transactions; Bank for International Settlements (BIS); administrative data from the central bank, ministry of finance, etc. |
| Reserve assets | Central-bank records; IMF (compiled by the central bank). |
The stock statement of external assets and liabilities — and what the net IIP says about a country's position with the world.
This module covers the International Investment Position (IIP) — a statistical statement that presents the value and composition of a country's external financial assets and liabilities at a specific point in time, typically at the end of a quarter or year. It shows the stock of financial claims a country holds on the rest of the world (assets) and the stock of financial obligations it owes to nonresidents (liabilities). The difference gives the net IIP, which indicates whether a country is a net creditor or net debtor to the rest of the world.
The IIP is the stock counterpart of the Balance of Payments: where the BOP records flows over a period, the IIP records the levels of external assets and liabilities at a point in time.
The IIP includes all financial assets and liabilities between a country and the rest of the world. This covers investment by residents abroad and what nonresidents have invested in the country, and it usually involves a resident (a person or institution in the country) and a nonresident (a person or institution abroad).
The IIP mirrors the presentation of the financial account. Five dimensions are used to classify it:
| Dimension | Description | Examples / categories |
|---|---|---|
| (a) Functional category | The nature of the investment relationship between residents and nonresidents | Direct investment; portfolio investment; financial derivatives & ESOs; other investment; reserve assets |
| (b) Financial instrument | Type of financial asset or liability involved | Equity & investment fund shares; debt instruments (e.g. bonds, loans); other financial assets/liabilities |
| (c) Institutional sector | The type of resident institutional unit involved | Central bank; deposit-taking corporations (except central bank); general government; other financial corporations; nonfinancial corporations; households and NPISHs |
| (d) Maturity | The original or remaining time until a debt instrument is due | Short-term (≤ 1 year); long-term (> 1 year) |
| (e) Currency | The currency in which the asset or liability is denominated | Domestic currency; foreign currency |
The integrated IIP explains the change between the opening and closing positions through the accumulation accounts — the BOP financial-account transactions and the other changes in financial assets and liabilities accounts (which comprise revaluations and other changes in volume).
| Component | Description |
|---|---|
| Opening IIP | Position of external assets and liabilities at the beginning of the period. |
| + Financial-account transactions | Cross-border purchases/sales of financial assets and liabilities (BOP financial flows). |
| ± Revaluations | Changes in value due to exchange-rate or market-price fluctuations. |
| ± Other volume changes | Events such as debt write-offs, reclassification, or natural disasters. |
| Closing IIP | Position at the end of the period, after applying all changes. |
Interpreting IIP balances means understanding the net relationship between a country's external assets and liabilities at a point in time, and along each dimension.
| Aspect | Description | Interpretation |
|---|---|---|
| Net IIP | Total external assets minus total external liabilities | Positive → net creditor/lender; negative → net debtor/borrower. |
| Positive net IIP | The country holds more claims (assets) on the world than nonresidents hold in the country | Indicates a strong external position, financial stability and potential to lend globally. |
| Negative net IIP | The country owes more (liabilities) than it owns abroad | Suggests external dependence, borrowing needs, or exposure to capital outflows. |
| By functional category | Direct, portfolio, other investment, financial derivatives, reserve assets | Shows the type of external exposure — e.g. FDI implies long-term confidence, portfolio may be volatile. |
| By institutional sector | Central bank, general government, deposit-taking corporations, other sectors | Identifies who owns or owes externally — public or private sector. |
| By financial instrument | Equity and debt instruments | Highlights the nature of assets/liabilities — equity more stable, debt implies repayment obligations. |
| Changes over time | Compare opening and closing balances across periods | Track external wealth accumulation or rising liabilities. |
| As % of GDP | Ratio of net IIP to gross domestic product | Helps assess sustainability: a large negative IIP/GDP may raise risks, while a positive ratio suggests a surplus economy. |
The IIP is like a financial health report of a country's relationship with the world — it shows what the country owns abroad and what it owes to nonresidents.
The IIP is compiled from a range of sources that together cover all external assets and liabilities:
| Data source | Type of information provided |
|---|---|
| International Transactions Reporting System (ITRS) | Transactions between residents and nonresidents, including financial flows and positions. |
| Banking-sector reports | External assets and liabilities of deposit-taking corporations (e.g. deposits, loans). |
| Direct-investment surveys | Equity, reinvested earnings and intercompany lending between affiliated entities. |
| Portfolio-investment surveys | Holdings of equity and debt securities by residents and nonresidents. |
| External debt statistics | Stock and flow data on loans, debt securities and other debt owed to nonresidents. |
| Central-bank records | Reserve assets including SDR holdings, and central-bank claims and liabilities. |
| Insurance and pension-fund reports | Cross-border entitlements, technical reserves and pension liabilities. |
| Corporate financial statements | Foreign financial assets and liabilities of nonfinancial corporations. |
| Customs and trade-credit data | Trade-related credits and advances between residents and nonresidents. |
| Stock exchanges & central securities depositories | Foreign holdings of domestic securities and vice versa. |
| Administrative data (e.g. tax authority) | Cross-border ownership and income flows. |
This assessment has 37 questions in its bank; you will be asked a randomly selected 20. The question order and the answer options are shuffled on every attempt, so a retake will mix in new questions. You need 75% to pass and earn your certificate.