The MIP scoreboard indicator is the three-year backward moving average of the current account balance expressed in percent of GDP and calculated as: [[(CA/GDP)t + (CA/GDP)t-1 + (CA/GDP)t-2] / 3]*100. The indicative thresholds for the indicator are of +6% and -4%. The indicator is based on the Balance of Payments (BoP) data reported to Eurostat byEU Member States.
The BoP is a statistical statement that systematically summarises, over a given period of time, all the transactions of an economy with the rest of the world. The balance of payments records all economic transactions undertaken between the residents and non-residents of a country during a given period. A transaction is defined as an economic flow that reflects the creation, transformation, exchange, transfer, or extinction of economic value and involves changes in ownership of goods and/or financial assets, the provision of services, or the provision of labour and capital.
The concept of resident in the BPM6 is identical to the one used in the 2008 System of National Accounts (SNA) and 2010 European System of National and Regional Accounts (ESA 2010). The concept is not based on nationality or legal criteria. It is based on the notion of a centre of economic interest. An institutional unit is a resident unit when it has a centre of economic interest in the economic territory of a country for a period of at least one year. The balance of payments provides information on the total value of credits (or exports), debits (or imports), net acquisition of financial asset and net incurrence of liabilities for each BOP item and on the balance (credits minus debits) or net (net acquisition of financial asset minus net incurrence of liabilities) of the transactions with each partner.The current account together with the capital and the financial accounts form the balance of payments.
For the purpose of introducing EU and euro area aggregates, different values of the partner dimension have to be considered. The current account balance for a country refers to the transactions of a country with the "Rest of the world" as a partner (including other euro area or EU Member States). In the case of European aggregates, the partner is different: for the euro area, the partner is “Extra euro area”, while for the EU the partner is “Extra EU”. This implies the elimination of all flows between members of the euro area/EU, and affects all indicators listed in the tables.
The balance of payments is broken down into three broad sub-balances: the 'Current account' (I.), the 'Capital account' (II.) and the 'Financial account' (III.).
I. Current account shows the flows of goods, services, primary income and secondary income between resident and non-resident units:
1. Goods
BOP itemGoodscoversgeneral merchandise,non-monetary goldand, since the implementation of the BPM6,net export of goods under merchanting.The most important component,General merchandise, includes all movable goods whose ownership is transferred from a resident to a non-resident and vice versa.
2. Services
'Services' are the second major category of the current account. In the production of data on International Trade in Services the references are the IMF’s BPM6 and the United Nations’ Manual on Statistics of International Trade in Services 2010.
Categories of services: Transport, Travel, Construction services, Insurance services, Financial services (which include explicitly charged and other financial services, and financial intermediation services indirectly measures), Charges for the use of intellectual property, Telecommunications, computer and information services, Other business services, which include research and development services, professional and management consulting services, and techincal, trade-related and other business services, Personal, cultural and recreational services, Government goods and services.
When combined, goods and services together make up a country's balance of trade. The balance of trade is typically the biggest bulk of a country's balance of payments as it makes up total imports and exports. If a country has a balance of trade deficit, it imports more than it exports, and if it has a balance of trade surplus, it exports more than it imports.
3. Primary income
Primary incomecovers three types of transactions between residents and non-residents: Compensation of employees, Investment income and Other primary income.
4. Secondary income
It is a counterpart entry, required by the double-entry system used in BOP compilation, that offsets the provision of a non-financial, or financial, item by a resident to a nonresident (or vice versa) without a counterpart return of an item of economic value.Secondary incomeconsists of all transfers, which are not capital (see below). Current transfers are broken down, according to the sector of the compiling economy, into two subcomponents: general government and other sectors.
II. Capital account covers all transactions that involve (a) the receipt or payment of capital transfers (debt forgiveness, nonlife insurance claims, investment grants, one-off guarantees and other debt assumption, capital taxes and other capital transfers) and (b) the acquisition/disposal of non-produced, non-financial assets, which includes transactions associated with tangible assets (e.g., land and subsoil assets) and transactions associated with intangible assets (e.g., patents, copyrights, trademarks, franchises, etc.).
III. Financial account covers all transactions associated with changes of ownership in the foreign financial assets and liabilities of an economy. The financial account is broken down into five basic functional categories: Direct investment (divided by instrument into equity and investment fund shares, reinvestment of earnings and debt instruments), Portfolio investment (divided by instrument into equity and investment fund shares, reinvestment of earnings for investment fund shares and debt securities), Financial derivatives and employee stock options, Other investment (divided by instrument into other equity, currency and deposits, loans, insurance, pension schems and other standardised guarantee schemes, trade credits and advances, other accounts receivable/payable and special drawing rights) and Official reserve assets (divided by instrument into monetary gold, special drawing rights, reserve position in the International Monetary Fund and other reserve assets).
The data published under the MIP domain are quarterly and annual time series. The quarterly data are annualized as sum of four quarters of each year. The lengths of the series vary according to country, for details on time coverage see thecorresponding table:
tipsbp10(Current account balance - 3 year average);tipsbp11(Current account, main components, net balance - annual data, % of GDP);tipsbp12(Current account, main component, credit - annual data, % of GDP);tipsbp13(Current account, main components, debit - annual data, % of GDP);tipsbp14(Current account, main components, net balance - annual data, million units of national currency);tipsbp15(Current account, main components, credit - annual data, million units of national currency);tipsbp16(Current account, main components, debit - annual data, million units of national currency);tipsbp17(Capital account - annual data);tipsbp18(Financial account - annual data);tipsbp19(Financial account by components, net balance - annual data, million units of national currency);
tipsbp20(Current account balance - annual data);tipsbp21(Direct investment in the reporting economy, main components - annual data, million units of national currency);tipsbp22(Direct investment abroad, main components - annual data, million units of national currency);tipsbp90(Direct investment in the reporting economy (flows) - annual data, % of GDP);tipsbp100(Direct investment in the reporting economy (stocks) - annual data, % of GDP);tipsbp70(Net Lending/Borrowing, current and capital account - annual data);
tipsbp40(Current account balance - quarterly data);tipsbp41(Current account, main components, net balance - quarterly data, % of GDP);tipsbp42(Current account, main components, credit - quarterly data, % of GDP);tipsbp43(Current account, main components, debit - quarterly data, % of GDP);tipsbp44(Current account, main components, net balance - quarterly data, million units of national currency);tipsbp45(Current account, main components, credit - quarterly data, million units of national currency);tipsbp46(Current account, main components, debit - quarterly data, million units of national currency);tipsbp47(Capital account - quarterly data);tipsbp48(Financial account - quarterly data);tipsbp49(Financial account, main components - quarterly data, million units of national currency);tipsbp50(Net Lending/Borrowing (current and capital account) - quarterly data);tipsbp51()Direct investment in the reporting economy - quarterly data, % of GDP;tipsbp52Direct investment in the reporting economy, main components - quarterly data, million units of national currency();tipsbp53(Direct investment abroad - quarterly data, % of GD);tipsbp54(Direct investment abroad, main components - quarterly data, million units of national currency).
