CBS Lesson 2-3-12 19 September 2022

External Statistics
LESSON #2 AND #3
Central Banks’ Statistics

Post-Graduation in Statistical Systems
2022|2023
Lessons 2 &3: 12th and 19th September 2022
1. Current Account
2. Goods and Services Account
3. Goods
4. Services

Post-Graduation in Statistical Systems, 2022|2023 2
Current Account
General overview

Goods and Services Account
General overview
 Goods and Services Account shows transactions in items that are

outcomes of production activities
 Focus - the point at which goods and services are exchanged
between a resident and a nonresident
 Production - activity in which an enterprise uses inputs (intermediate
inputs, labor, produced and nonproduced assets) in order to transform
them to an output that can be supplied to other units
 Valuation follows market values

 Time of recording
 Goods – change of economic ownership
 Services – when services are provided
Counterpart entries
 Financial account
 currency and deposits - for items paid at the same time as the provision
of the good or service
 trade credit - payment is made after the change of ownership
 advance - (from the importer to the exporter) if payment is made before
change of ownership
 Current / Capital account - exchanges for something other than

financial assets
 goods and services (e.g., barter)
 capital (e.g., goods under investment grants)

Main components

Goods
Definition / General merchandise
 Goods are physically, produced items over which ownership rights

can be established and whose economic ownership can be passed
from one institutional unit to another by engaging in transactions
 Goods account includes transactions in products that were generated
in previous periods and output of other economic territories
 General merchandise covers goods that change economic ownership
between residents and nonresidents not included in the following
specific categories:
Goods under merchanting Nonmonetary gold
Parts of travel Construction
Government goods and services n.i.e.

Goods
General merchandise
 Main source International Merchandise Trade Statistics (IMTS) set by

United Nations
 Items to be included in general merchandise
 Noncustomized packaged software
 Goods procured in ports by carriers
 Goods supplied or acquired by carriers away from the territory of
residence of the operator
 Goods acquired by a lessee under a financial lease
 Goods sent abroad without a change of ownership, but later sold
 Illegal goods, Smuggled goods that are otherwise legal, Gifts
 Electricity, gas, and water
Goods
General merchandise
 Goods acquired to be processed without passing through the territory of

the owner and goods sold after processing without passing through the
territory of the owner
 Equipment that is sold while outside the territory of residence of its
original owner
 In addition, there are items to be excluded:

 when there is no international transaction (e.g., migrants´ personal
effects – personal property that accompanies people changing residence,
Goods consigned to embassies, military bases…)
 when they are included elsewhere (e.g., Goods acquired or sold by
residents but that do not enter the economic territory are shown
separately as goods under merchanting, goods included in travel, …)

Goods
General merchandise
 Time of recording (BoP) - Transactions should be recorded at the time
of the change of ownership of the goods
 Time of recording (IMTS) - when goods enter or leave the territory,

(date of lodgment of the customs declaration is an approximation)
 There may exist some differences between the timing of the
ownership change (BoP) and customs recording (ITMS)
 High-value capital goods (e.g., ships - change ownership progressively
with stage payments / customs data when crosses the customs frontier)
 Goods on consignment (e.g., goods sent for auction or for temporary
storage before sale, the change of ownership may not occur until later )

Goods
General merchandise
 Valuation (BoP) - market value of goods at the point of uniform

valuation, at the customs frontier of the economy from which the
goods are first exported - free on board (FOB)
 Valuation (IMTS) - Uses FOB-type (exports) and CIF-type (imports)
 FOB-type includes:
Free on board (FOB) at port on the frontier of the exporting country
(for goods dispatched by sea or inland waterways)
Free carrier (FCA) at terminal on the frontier of the exporting country
(for goods dispatched by means of transport for which FOB is n.a.)
Delivered at frontier of the exporting country (for goods dispatched by
means of transport for which FOB and FCA are not applicable, e.g.
when goods are exported by railroad or pipeline)
Goods
General merchandise
 CIF-type is the value at the border of the importing country. It includes

the cost, insurance and freight of transporting from exporting country to
the border of the importing country
 The CIF / FOB adjustment is given by: CIF  FOB  Freight  Insurance
 Factors to be considered in making the CIF/FOB adjustment
 The economy of origin of the imports (if custom points of two territories
are contiguous, the CIF / FOB valuations are equal)
 The distance that the good has to travel (the longer the distance, the
greater the freight cost and the insurance charge)
 The changing composition of goods over time (as the composition of
imported goods changes, the weights attached to each commodity will
need to be adjusted)

Goods
General merchandise
CIF / FOB adjustment
F.O.B.
EXPORTS C.I.F. Domestic

economy
(Freight + Insurance)
C.I.F.
Foreign
economy
IMPORTS
F.O.B.
(Freight + Insurance)

Goods
General merchandise
 In some cases an estimate of a market-price equivalent price may
need to be made (e.g., barter trade, aid goods, …)
 Methodological differences imply the existence of adjustments
needed when using IMTS in BoP:
i) Goods that change ownership without crossing borders, or goods
that cross borders, but do not change ownership
ii) CIF/FOB adjustment
Example: A country “X” imported goods valued at c.i.f. MEUR 100 from
country “Y”. The costs of international freight imports transportation
were MEUR 6 and insurance MEUR 4

Goods
Other Goods - Merchanting
 Merchanting is defined as the purchase of goods by a resident from a

nonresident combined with the subsequent resale of the same goods
to another nonresident without the goods being present in the
compiling economy or passing its frontier
 Occurs for transactions involving goods where physical possession of
the goods by the owner is unnecessary for the process to occur
 Only net amounts are included (Net exports of goods under
merchanting). Gross values are recorded always as credits/exports
 Valuation at transaction prices as agreed by the parties, not FOB
 Treatment of merchanting
(1) The acquisition of goods by merchants is shown under goods as a
negative export of the economy of the merchant
Goods
(2) The sale of goods is shown under goods sold under merchanting as a
positive export of the economy of the merchant
includes merchants’ margins, holding gains and losses, and changes in
inventories of goods under merchanting (it may be negative)
Net exports of goods under merchanting  (2)  (1)
Example: A country “X” bought apples from country “Y” for MEUR 10 and
sold directly to country “Z” for MEUR 15 (without crossing the border)

Goods
Merchanting
Foreign
economy
Foreign
economy
Trader
Domestic economy

Goods
Other Goods - Nonmonetary gold
 Nonmonetary gold covers all gold other than monetary gold which is
owned by monetary authorities and held as a reserve asset.
Nonmonetary gold may be held as a store of value or for other
(industrial) purposes (e.g., manufacturing of jewelry)
 Can be in the following forms:
 bullion (i.e., coins, ingots, or bars)
 allocated gold accounts are treated as being arrangements for the
storage of gold bullion (except when is between monetary
authorities)
 gold powder and gold in other unwrought or semi manufactured
forms

Goods
Other Goods - Nonmonetary gold
 Jewelry, watches, and so forth that contain gold are included under
general merchandise, not nonmonetary gold
 Valuation nonmonetary gold sales and purchases that are not shipped
are valued at transaction prices (not FOB)
 Time of recording change in ownership. Sales and purchases should
be recorded even when there is no physical movement
 Nonmonetary gold is shown separately from other goods because:
the values of sales and purchases may be particularly large in the
cases of gold dealing centers
the special role of gold in financial markets

Goods
Reconciliation IMTS / BoP

Services
Main definitions

Services
General overview
 Production activity that changes the conditions of the consuming

units / facilitates the exchange of products / financial assets
 Time of recording is the time at which the service is delivered
 The provision of services should be recorded on an accrual basis in
each period (as they are rendered)
 Time differences between payment and delivery is recorded as:
trade advances (extinguished as the service is provided)
trade credit (arise as the service is provided)
 The classification is according to the type of service, rather than the
unit that provides it (e.g., if a bank provides pension fund services as a
secondary activity, the service is classified as pension fund services)
Services
General overview
 It follows two approaches: product-based and transactor-based

(travel, construction, and government goods and services n.i.e.)
Manufacturing services on physical inputs
Financial services
by others
Changes for the use of intellectual property,
Maintenance and repair services
n.i.e.
Telecommunications, computer, and
Travel
information services
Transport Other business services
Construction Personal, cultural and educational services
Insurance and pension services Government goods and services, n.i.e.
 The Manual on Statistics of International Trade in Services (MSITS) is a

source of additional information
Services
Classification
Manufacturing Services on Physical Inputs Owned by Others
 Processing, assembly, labeling, packing and so forth undertaken by
enterprises that do not own the goods concerned. Includes also the
transaction between the owner and processor – only the fee charged
by the processor (e.g., oil refining) = value of service
 The manufacturing is undertaken by an entity that does not own the
goods and is paid a fee by the owner
 Providers of manufacturing services on goods processed in the
compiling economy: Goods received for processing (debit), Goods
dispatched after processing (credit)
 Customers of manufacturing services on goods processed abroad:
Goods supplied for processing (credit) – Goods dispatched after
processing (debit)
Services
Classification
Maintenance and repair services n.i.e.

 Maintenance and repair work by residents (nonresidents) on goods
that are owned by nonresidents (residents) - credit (debit)
 Valuation the value of the work done - not the gross value of the
goods before and after repairs, includes any parts or materials
supplied by the repairer and included in the charge (does not include
value of goods for repair)
Example: Country “X” bought apples from country “Y” for MEUR
10. Then the apples are sent to country “C” (without passing
through country “X”) for packing for a charge of MEUR 1 payable
by country “X”. The apples are then sold by country “X” directly to
country “Z” for MEUR 15 (without crossing the border)
Services
Classification
Transport
 Process of carriage of people and objects from one location to
another as well as related supporting and auxiliary services. Also
included postal and courier services
 mode of transport: sea, air, or other (rail, road, internal waterway,
pipeline, space transport, electricity transmission), postal and courier
 object (what is carried): passengers, freight or other services (auxiliary
to transport not directly provided for the movement of goods and
persons, e.g., air traffic control)

Services
Classification
Transport
 Passenger services (e.g., excess baggage charges)
 Transport of people includes all services provided in the international
transport of nonresidents (residents) by resident (nonresidents) carriers -
credit (debit)
 Valuation include fees payable by the carriers to travel agencies and other
providers of reservation services
 Freight services
 Transport of objects may relate to goods where there is no change of
ownership (goods sent for storage / processing and migrants’ personal
effects)
 Valuation at the customs frontier of the exporting economy, all freight costs
up to (beyond) the customs frontier are shown as incurred by the exporter
(importer)
Services
Classification
Transport
 Other transport services
 Services that are auxiliary to transport and not directly provided for the
movement of goods and persons (e.g., freight forwarding and brokerage
services)
 Postal and courier services

 Pick-up, transport, and delivery of letters, newspapers, periodicals,
brochures, other printed matter, parcels, and packages, including post office
counter and mailbox rental services
 Express and door-to-door delivery. Express delivery services might include,
for example, on-demand pick-up or time-definite delivery (courier services)
 Valuation at the customs frontier of the exporting economy, all freight costs
up to (beyond) the customs frontier are shown as incurred by the exporter
(importer)
Services
Classification
Travel
 Goods / Services for own use or to give away acquired from an
economy by nonresidents (from other economies by residents) during
less than one year (except for students and medical patients) visits
to that economy - credit (debit)
 The goods and services may be purchased by the persons concerned
or by another party on their behalf
 Standard components breakdown
Business travel - goods and services purchased by individuals
who are traveling primarily for business purposes
Personal travel - related purposes other than business (e.g.,
holidays, participation in cultural and recreational events,…)
Services
Classification
Travel (cont.)
 Goods and services should be registered in Travel when the purchase
is for own use by individuals with a travel status and their value do
not exceed customs thresholds that do not need to be declared.
Goods and services acquired by travelers from the economies in which
they are traveling and for their own use (also included)
 Transactor-based classification goods and services provided to
visitors while on their trips that would be classified under
(telecommunications or local transport) are included under travel
Example: A company resident in country “X” pays 20 M€ for hotel expenses of its
employees attending to a conference abroad

Services
Classification
Construction
 Creation, renovation, repair, or extension of fixed assets (buildings,
land improvements, roads,…), related installation and assembly work,
site preparation and general construction as well as specialized
services, management of construction projects
 Short-term nature - one year guideline for residence except for
students and medical patients.
 The value of the construction service should equal the full value of
the construction project (output)
 Valuation gross value of output - value of all goods and services used
as inputs to the work, other costs of production, and the operating
surplus that accrues to the owners of the construction enterprise

Services
Classification
Construction (cont.)
 If transfer of ownership occurs in stages as value is put in place, stage
payments can be used to approximate the value of gross fixed capital
formation. Stage payments may sometimes be made in advance or in
arrears of the completion of the stage (advances / trade credit)
Construction abroad: The resident company provides construction services
abroad without establishing branch (credits). The same company purchases
(imports) goods and services in the economy of the work completion
(debits)
Construction in the compiling economy: Non-resident company without
establishing branch, provides construction services in the compiling
economy (debits). The same company purchases (exports) goods and
services in the compiling economy (credits)

Services
Classification
Insurance and pension services
 Include services of providing life insurance and annuities, nonlife
insurance reinsurance, freight insurance, pensions, standardized
guarantees, auxiliary services to insurance, pension schemes and
standardized guarantee schemes
 Only registers the value added of the operation (remuneration of the
service), that is the margin between the amounts accruing to the
companies (premiums, contributions and supplements) and the
amounts accruing to the policyholders (claims and benefits)
 Premiums /compensation are not Services, they should instead be
recorded: in the current account |Secondary income (nonlife insurance)
in the financial account | Other investment (life insurance)

Services
Classification
Insurance and pension services (cont.)
 Life insurance and annuities - saving throughout entire life of the contract. [Gross
premiums earned + Premium supplements – Benefits due – Increases (+
decreases) in life insurance reserves (actuarial reserves and reserves for with-
profits insurance)]
 Reinsurance - allows insurance risk to be transferred from one insurance provider
to another [Total actual premiums earned less commissions payable + Premium
supplements – Adjusted claims incurred and profit sharing]
 Nonlife insurance - spread risks across all policy-holders, it pays benefits only if
an insured event occurs, e.g., accident. [Gross premiums earned + Premium
supplements – Claims payable – Adjustment for claims volatility, if necessary]
 Insurance and pension funds - those operated with an autonomous fund as well
as funds that are not separate units and unfunded pension schemes. [Gross
contributions + Contribution supplements – Benefits payable – Adjustment for
change in pension entitlements]
Services
Classification
Financial services
 Financial intermediary and auxiliary services, except insurance and
pension fund services usually provided by banks and other financial
corporations. May be charged for:
Explicit charges (deposit and lending services, fees for one-off
guarantees, early or late repayment fees or penalties,…)
Margins on buying and selling transactions (dealers in foreign
exchange, bonds, notes, financial derivatives)
Asset management costs deducted from property income receivable
in the case of asset-holding entities (the counter-entry is the net
investment income receivable to the gross income)

Services
Classification
Financial services (cont.)
Margins between interest payable and the reference rate on loans and
deposits, Financial Intermediation Service charges Indirectly Measured
FISIM is the difference between the interest rate the financial
intermediary receives from its debtors (loan takers) and the interest
rate that it has to pay to its creditors (deposit makers)
Actual interest (loans)  pure interest  FISIM
 Pure interest is recorded in primary income. An adjustment is needed

in the Primary income account, where interest received/paid is
registered, in order to carry out a portion of it to the Services account

Services
Classification
Example: A French bank provides MEUR 100 loan to a Portuguese enterprise.
The Portuguese enterprise has to pay interest of 8%. The bank can lend the
same amount of money without risk at 2.5%.
Charges for the use of intellectual property n.i.e

 Charges for the use of proprietary rights (patents, trademarks, copyrights,
industrial processes and designs including trade secrets, franchises). These
rights can arise from research and development, marketing
 Charges for licenses to reproduce or distribute (or both) intellectual property
embodied in produced originals or prototypes (copyrights on books and
manuscripts, computer software, cinematographic works, and sound
recordings) and related rights (such as for live performances and television,
cable, or satellite broadcast)

Services
Classification
 Recording follows accrual principle and charges should be spread
over period of use (may only be able when payments are made)
Telecommunications, Computer, and Information services
 Defined in terms of nature of the service, not the method of delivery
 Telecommunications services - broadcast / transmission of sound,
images / other information (telephone, telex, telegram, radio,
television). Includes business network, teleconferencing, and support
services. Computer services - hardware / software-related and data-
processing services. Information services - news agency services,
photographs and feature articles to the media
Example: A company resident in country “X” pays 10 M€ to a nonresident
company for telecommunications services

Services
Classification
Other business services
 Research and development consist of services that are associated with
basic research, applied research, and experimental development of
new products and processes (valuated at cost)
 Professional and management consulting services legal, accounting,
management consulting, managerial, public relations, advertising, …
 Technical, trade-related, and other business services includes
architectural, engineering, waste treatment and depollution,
agricultural, mining services, operating leasing services (renting out
produced assets), trade-related services, other business services
(distribution services related to water, steam, gas, and other
petroleum products and air-conditioning supply)

Services
Classification
Personal, cultural, and recreational services
 Audiovisual and related services services and fees related to the
production of motion pictures, radio, tv programs, musical recordings,
and other personal, cultural, and recreational services (health,
education services, …)
 Government goods and services n.i.e. supplied by and to enclaves
(embassies, military bases, and international organizations), acquired
from the host economy by diplomats, consular staff, and military
personnel located abroad and their dependents, services supplied by
and to governments and not included in other categories of services

Questions, comments ...
João Falcão Silva

jmsilva@novaims.unl.pt | jmfsilva@bportugal.pt

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External Statistics

Central Banks’ Statistics

Central Banks’ Statistics

Central Banks’ Statistics

 Goods and Services Account shows transactions in items that are

 Valuation follows market values

 Current / Capital account - exchanges for something other than

Central Banks’ Statistics

Central Banks’ Statistics

 Goods are physically, produced items over which ownership rights

Goods under merchanting Nonmonetary gold

Parts of travel Construction

Government goods and services n.i.e.

 Main source International Merchandise Trade Statistics (IMTS) set by

 Goods acquired to be processed without passing through the territory of

 In addition, there are items to be excluded:

Central Banks’ Statistics

 Time of recording (IMTS) - when goods enter or leave the territory,

Central Banks’ Statistics

 Valuation (BoP) - market value of goods at the point of uniform

 CIF-type is the value at the border of the importing country. It includes

Central Banks’ Statistics

CIF / FOB adjustment

EXPORTS C.I.F. Domestic

Central Banks’ Statistics

Central Banks’ Statistics

 Merchanting is defined as the purchase of goods by a resident from a

Net exports of goods under merchanting  (2)  (1)

Central Banks’ Statistics

Central Banks’ Statistics

Central Banks’ Statistics

Central Banks’ Statistics

Central Banks’ Statistics

Central Banks’ Statistics

 Production activity that changes the conditions of the consuming

 It follows two approaches: product-based and transactor-based

Transport Other business services

Construction Personal, cultural and educational services

Insurance and pension services Government goods and services, n.i.e.

 The Manual on Statistics of International Trade in Services (MSITS) is a

Maintenance and repair services n.i.e.

Central Banks’ Statistics

 Postal and courier services

Central Banks’ Statistics

Central Banks’ Statistics

Central Banks’ Statistics

Central Banks’ Statistics

Central Banks’ Statistics

 Pure interest is recorded in primary income. An adjustment is needed

Central Banks’ Statistics

Charges for the use of intellectual property n.i.e

Central Banks’ Statistics

Central Banks’ Statistics

Central Banks’ Statistics

Central Banks’ Statistics

João Falcão Silva

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