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- Jul. 23, 2019
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Home > Statistics > Outline of Statistics and Statistical Release Schedule > Explanations of Statistics > Explanation of "Balance of Payments Statistics (Data Based on the BPM5)"
Bank of Japan
This explanation is for the data through 2013 (discontinued).
Compilation section : Ministry of Finance and Bank of Japan, International Department, Balance of Payments Division
Balance of Payments Statistics are aggregated and estimated by the Bank of Japan, which is entrusted by the Minister of Finance under the Foreign Exchange and Foreign Trade Act
Frequency of compilation : Balance of Payments <Preliminary>: monthly basis
Balance of Payments <Revised>: quarterly basis
Regional Balance of Payments: quarterly basis
Time of release : Balance of Payments <Preliminary>: released at mid-month with results of two months before
Balance of Payments <Revised>: released two months after final release month of each quarter
Regional Balance of Payments: released in month following release of revised statistics
Method of release : Bank of Japan Internet web site
Balance of Payments Statistics are jointly released by the Bank of Japan and the Ministry of Finance.
Publications : "Balance of Payments Quarterly (International Department, Bank of Japan)"
This document has been prepared for current and prospective users, and provides easy-to-understand explanations of the outline of the balance of payments (BOP) statistics as based on the methodologies issued by the International Monetary Fund (IMF).
The BOP is a statistical statement that systematically summarizes, for a specific time period, the economic transactions of an economy with the rest of the world. The transactions between residents and nonresidents consist of: (1) those involving goods, services, and income, (2) those involving financial claims and liabilities, and (3) those classified as transfers. A transaction itself 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 labor and capital.
Japan's BOP statistics are based on the recording principles in the Balance of Payments Manual, fifth edition (BPM5) issued by the IMF. In accordance with the provisions of Article 8 Paragraph 5 of the IMF Agreement, the IMF requires member countries to provide information on their BOP statistics. The BPM5 establishes the standard international rules for the compilation of BOP statistics and provides guidelines on the reporting format to the IMF.
The main descriptions about treatments in Japan's BOP statistics are as follows.
The foreign exchange rates used in conversion are either of the following categories.
The components of Japan's BOP statistics are based on the BPM5 issued by the IMF. That is to say, while the IMF's "standard components" provide the basis for Japan's BOP statistics, various additions are made to facilitate analysis and research. For example, net values are provided for principal components and data are re-classified into more detailed sub-components. (This is referred to as "analytical format.") The components of Japan's BOP statistics are presented in the table below.
Table: Components of Japan's Balance of Payments
The methodologies of the components of Japan's BOP statistics are as follows.
"Trade balance" covers international transactions of "goods" (exports and imports), which are recorded at market value on a free on board (FOB) basis. Trade balance comprises the five categories of general merchandise, goods for processing, repairs on goods, goods procured in ports by carriers, and nonmonetary gold. However, transactions of nonmonetary gold pertaining to investment in gold and gold savings accounts are excluded. (These are included in "Capital and financial account".)
Source data for the compilation of trade balance consist of trade statistics. Trade statistics are compiled by the Ministry of Finance based on custom clearance documents.
In trade statistics, imports are valued on a CIF (Cost, Insurance and Freight) basis, while exports are valued on a FOB (Free On Board) basis. To derive FOB values, imports are adjusted by deducting freight and insurance costs.
Trade statistics are further adjusted for scope and time of recording before being used to derive trade balance. The major adjustments made are as follows.
"General merchandise" covers transactions of movable goods with changes of ownership between residents and nonresidents with quid pro quo. All transactions of movable goods, excluding goods for processing, repairs on goods, goods procured in ports by carriers, and nonmonetary gold, are recorded in general merchandise.
Source data are based on trade statistics and reports on payments/receipts submitted by individuals and enterprises.
Reports on payments/receipts cover payments or receipts between residents and nonresidents made through bank remittances, offsetting transactions, and through deposit accounts held abroad. Reports on payments/receipts include a "balance of payments component classification number" and are submitted by resident entities. The reported data are aggregated by balance of payments component classification number and are recorded under the appropriate component.
"Goods for processing" covers processing materials exported (imported) for processing, and products that are re-imported (re-exported) after processing, which are recorded on a gross basis. This component is an exception to the change of ownership principle because goods for processing do not undergo a change of ownership. Source data are based on trade statistics.
"Repairs on goods" covers the amount of repair for movable goods, such as ships and aircraft, owned by residents (nonresidents). This component is valued at the prices of repair, and not at the gross values of the goods. Source data are based on reports on payments/receipts.
"Goods procured in ports by carriers" covers transactions involving fuels, food stuff, and other goods procured in Japan (abroad) by carriers (ships, aircraft) owned by nonresidents (residents). Source data are based on reports on payments/receipts, and income/expenditure reports submitted by shipping enterprises and airlines (including the Japanese branches and representative offices of foreign shipping enterprises and airlines).
"Nonmonetary gold" covers all transactions in gold, excluding gold held by monetary authorities as a reserve asset (monetary gold) and investment in gold and gold savings accounts.
"Transportation" covers all transportation services provided between residents and nonresidents, such as passenger transportation, freight transportation, and rentals of transportation equipment with crew. Among related transactions, the followings are excluded from transportation: freight insurance (included in insurance services); goods procured in foreign ports by carriers (ships, aircraft) and repairs of transportation equipment (included in goods); repairs of harbors and airfield facilities (included in construction services); rentals of transportation equipment without crew (so-called operational leases, which are included in other business services).
Source data are based on reports on payments/receipts, and income/expenditure reports submitted by shipping enterprises and airlines. Transportation services are classified by mode of transport (sea, air, and other); for their part, these categories are classified by type of service (passenger, freight, and other transportation services).
"Travel" covers goods and services acquired by travelers from the economies in which they are traveling and for their own use. "Travel" is subdivided into two categories, namely, "business travel" and "personal travel," identified by purpose of travel. "Travel" is distinguished from other components of services by the following characteristics.
Travelers purchase goods and services from the residents of the countries to which they travel. Therefore, "travel" is not a specific type of service but a combination of goods and services consumed by travelers. "Travel" mainly covers expenditures on goods and services of nonresidents traveling in Japan and residents traveling abroad. Specifically, these include expenditures made for the following purposes: (1) accommodation, food and beverages, entertainment, and local transportation; (2) gifts; (3) business travel; (4) overseas education and medical care received during travel; and (5) package tours. The international carriage of travelers is classified as transportation and is not included in travel.
The definition of a traveler in Japan's BOP statistics is based on the provisions of the BPM5. That is to say, in principle, a traveler is an individual staying for a short period of time in an economy of which he/she is not a resident (expenditures made by international students and medical patients are recorded under travel, regardless of the length of their stay).
Source data are based on releases by government offices and other institutions of the survey results regarding expenditures for traveling to Japan and traveling abroad, the number of travelers, and the number of long-term international students and their per capita expenditures (tuition, cost of living, etc.), and on reports on payments/receipts.
"Other services" covers all service transactions between residents and nonresidents, excluding transportation and travel. These cover the following categories: communications services, construction services, insurance services, financial services, computer and information services, royalties and license fees, other business services, personal, cultural and recreational services, and government services, n.i.e..
"Communications services" covers receipts and payments between residents and nonresidents pertaining to communication services. Source data are based on reports on payments/receipts.
"Construction services" covers construction and installation project work that are performed abroad by Japanese enterprises and performed in Japan by foreign enterprises. Source data are based on reports on payments/receipts.
"Insurance services" are derived by subtracting claims from premiums of various types of insurance, which is provided by Japanese insurance enterprises to nonresident policyholders, and vice versa. Agent commissions for insurance transactions are also included in this component. Source data are based on reports on payments/receipts and reports submitted by non-life insurance enterprises.
"Financial services" covers financial intermediary and auxiliary services conducted between residents and nonresidents (except those of insurance enterprises). Source data are based on reports on payments/receipts, income reports submitted by banks and other financial institutions, reports concerning derivatives transactions, and reports concerning issuance of securities.
"Computer and information services" covers computer data and news-related service transactions between residents and nonresidents. Source data are based on reports on payments/receipts.
"Royalties and license fees" covers receipts and payments between residents and nonresidents for the authorized use of rights pertaining to patents, trademarks and other industrial property, mining rights and copyrights, and the use of produced original or prototypes, such as films, through licensing agreements. Source data are based on reports on payments/receipts.
"Other business services" covers various categories of service transactions between residents and nonresidents other than those defined above. The following are included in this component: gold dealing and other extremely short-term goods transactions that are concluded without crossing Japan's customs frontiers; and, the difference between buying and selling prices in nonmonetary gold transactions. Merchanting and other trade-related services, and operational leasing are also covered. Source data are based on reports on payments/receipts.
"Personal, cultural and recreational services" covers transactions between residents and nonresidents involving production expenses and rental charges for audiovisual and related services. Source data are based on reports on payments/receipts.
"Government services, n.i.e." is a residual category associated with the public sector and covers services not included in the above categories. Source data are based on reports on payments/receipts and expenditure reports submitted by government agencies.
"Income" covers two types of transactions between residents and nonresidents: those involving "compensation of employees" and those involving "investment income."
"Compensation of employees" covers compensation paid by residents to nonresident individuals, and compensation earned by residents in foreign countries. This component includes receipts and payments of wages and salaries to foreign (Japanese) crew working on ships and aircraft of Japanese (foreign) nationality. Source data are based on reports on payments/receipts, and income/expenditure reports submitted by shipping enterprises and airlines.
"Investment income" covers receipts and payments of interest, dividends and other income associated with residents' external financial assets and liabilities. Realized capital gains and losses are not included in this component (included in capital and financial account). Investment income comprises the following categories: direct investment income, portfolio investment income, and other investment income.
"Direct investment income" covers interest, dividends, and other investment income accruing to direct investors holding direct investments. Reinvested earnings (direct investors' shares of earnings of direct investment enterprises that have not been formally distributed) have been included in this component, beginning with the statistics for January 1996. Source data are based on reports on payments/receipts, and annual reports concerning stock of retained earnings submitted by resident enterprises. See Box 1 for estimation method of reinvested earnings.
Box 1: Estimation Method of Reinvested Earnings
Reinvested earnings are estimated based on annual reports on the stock of retained earnings submitted by enterprises. Monthly statistics are derived as follows.
"Portfolio investment income" covers receipts and payments of dividends derived from investments other than direct investment, interest accruing to government bonds and other securities, and interest accruing to money market instruments. Receipts and payments of interest accruing to discount bonds and notes are also included in this component. Source data are based on reports on payments/receipts, and income reports submitted by banks and other financial institutions.
Note: Revision in treatment of financial derivatives (derivatives transactions)
In Japan's former BOP statistics (ending with preliminary figures for December 2001), receipts and payments pertaining to financial derivatives were recorded under "Portfolio investment income." However, in light of the partial revision of the BPM5 issued by the IMF, receipts and payments of interest pertaining to financial derivatives were moved to "Financial derivatives," which was established as a new sub-component of "Capital and Financial account." (Time series data for the revised treatment of interest pertaining to financial derivatives are published under "Balance of Payments Statistics: After the revision of the statistical treatment of financial derivatives (from Jan. 1996)."
As there is no actual flow of funds during the period in which discount bonds and notes are held, no reports are submitted on receipts and payments. Therefore, this sub-component is estimated based on annual reports submitted by enterprises. See Box 2 for estimation method for discount bonds and notes.
Box 2: Estimation Method for Discount Bonds and Notes
"Other investment income" covers receipts and payments pertaining to all claims and liabilities between residents and nonresidents other than direct investment income and portfolio investment income. For instance, receipts and payments of interest on loans and deposits are recorded under this component. Source data are based on reports on payments/receipts, and income reports submitted by banks and other financial institutions.
The double-entry system requires offsetting items, transfers, to balance unilateral transactions, whereby one economic entity provides a real resource, such as goods and services, or a financial item without quid pro quo. Transfers are classified as "current transfers," which is current account payments of the counter-country, and as "capital transfers," which contributes to capital formation in the counter-country. The former is recorded under current account, and the latter is recorded under capital and financial account. Current transfers are all transfers that are not classified as capital transfers, and include grants-in-aid between individuals and between governments, contributions to international organizations, workers' remittances, and receipts and payments of claims for non-life insurance.
Source data are based on information and reports on payments/receipts submitted by government agencies, and reports submitted by non-life insurance enterprises. Current transfers are divided into the two categories of "public sector" and "other sectors," depending on whether the resident entity belongs to the public sector.
"Capital and financial account" covers receipts and payments of assets and liabilities between residents and nonresidents, and consists of two main categories: "financial account" and "capital account."
"Financial account" covers transactions of financial assets and liabilities between residents and nonresidents, and comprises the following sub-components: direct investment, portfolio investment, financial derivatives, and other investment.
On the other hand, "capital account" covers transactions between residents and nonresidents involving the transfer of ownership of fixed assets, and transactions of non-produced, nonfinancial assets. Capital account comprises "capital transfers" and "acquisition/disposal of non-produced, nonfinancial assets." Valuation changes are not included in this component. (Valuation changes are reflected in international investment position.)
The following sub-components of financial account are classified by the sector of the resident: portfolio investment, financial derivatives, and other investment. In Japan's BOP statistics, the monetary authorities and general government are included in public sector.
"Direct investment" covers all transactions (investments) between direct investors and direct investment enterprises. These include acquisition of equity capital, reinvested earnings, and lending/borrowing of funds. A direct investor is defined as a resident entity with a lasting interest in an enterprise resident in another economy. In principle, a direct investment relationship comes into being when the percentage of ownership is 10 percent or more.
Acquisition/disposal of foreign (domestic) real estate by residents (nonresidents) is also included in direct investment.
Source data are based on reports on payments/receipts, and annual reports concerning reinvested earnings submitted by resident enterprises. Reinvested earnings have been recorded since January 1996. Reinvested earnings are recorded under "Outflow" of direct investment (assets) or under "Inflow" of direct investment (liabilities). Negative figures (-) are recorded when retained earnings decrease.
"Portfolio investment" covers transactions between residents and nonresidents in equity and debt securities that are not included in "direct investment" and "changes in reserve assets." Bonds and notes and money market instruments are included in this component. Acquisitions by nonresidents of CD issued by Japanese banks are recorded under other investment (currency and deposits). On the other hand, acquisitions by residents of CD issued abroad (defined as securities under the Foreign Exchange Act) are recorded under portfolio investment. Government bonds, government agency bonds, and local government bonds are included in "sovereign bonds" of "outward portfolio investment, country breakdown of sovereign bonds." The time of recording for portfolio investment has been changed from settlement date to contract date since January 2005.
Box 3: Treatment of Securities Lending Transactions
Two sets of data are released for portfolio investment. One is "including securities lending," while the other is "excluding securities lending." This is because securities lending transactions are subject to large short-term fluctuations, which can cause significant discrepancies between monthly portfolio investment data and actual developments in the buying and selling of securities. It is appropriate to exclude securities lending transactions to figure out developments in global securities transactions, or to accurately analyze developments in the portfolio element of securities transactions.
Securities lending transactions also affect other investment (theoretically, the buying and selling of securities causes changes in the balance of currency and deposit accounts). Therefore, two sets of data (including and excluding securities lending transactions) are also released for other investment.
Source data are based on reports concerning securities transactions and reports concerning issuance and redemption submitted by securities companies, banks, major institutional investors, and government agencies.
"Financial derivatives" covers realized profit or loss on options, futures and forward agreements, warrants, and currency swaps. Interest accruing to interest-rate swaps is also recorded under this component. Source data are based on reports on payments/receipts, and reports concerning derivatives transactions and securities transactions.
"Other investment" covers all financial instruments other than those classified as direct investment, portfolio investment, financial derivatives, or reserve assets. This component includes trade credits, loans, currency and deposits, and other assets/liabilities. Other assets/liabilities include receivable and payable accounts resulting from timing difference (adjustment for the timing difference between contract date and settlement date) since January 2005 when the time of recording for portfolio investment was changed from settlement date to contract date. Securities lending transactions are recorded under loans in other investment.
Transactions of nonmonetary gold pertaining to investment in gold and gold savings accounts are also included in other investment (excluded from "goods" in the current account). These transactions are defined as financial transactions because they do not involve physical movement of goods across Japanese customs frontiers, and they generate fixed interest.
Source data are based on quarterly trade credit questionnaires submitted by Japanese exporters (importers), reports concerning loans extended, reports concerning assets and liabilities submitted by banks and others, reports concerning balance of external deposits, and reports on payments/receipts. Because trade credit questionnaires are submitted on a quarterly basis, the data need to be divided among the relevant months (distributed in proportion to quarterly distribution of export and import values).
"Capital transfers" covers the transfer of funds pertaining to the acquisition/disposal of fixed assets, the transfer of ownership of fixed assets, and forgiveness of debt by creditors. Source data are based on reports on payments/receipts and reports submitted by government agencies. Source data for forgiveness of debt are based on reports submitted by government agencies and resident enterprises. Capital transfers are divided into the two categories of "public sector" and "other sectors," depending on whether the resident entity belongs to the public sector.
"Acquisition/disposal of non-produced, nonfinancial assets" covers transactions involving intangible, nonfinancial assets, such as patents, copyrights, trademarks, transferable contracts, and the purchase and sale of land by embassies or international organizations.
"Changes in reserve assets" covers changes in those external assets that are readily available to and controlled by monetary authorities. Reserve assets include monetary gold, SDRs, and reserve positions in the IMF. Source data are based on information concerning the stock of reserve assets prepared by the Ministry of Finance.
The Bank of Japan releases the seasonally adjusted data and the seasonal adjustment factors for the current account items, using the U.S. Census Bureau's X-12-ARIMA method. Seasonal adjustment using a logarithmic transformation with a multiplicative model is adopted for all items except for direct investment income. The reference period used for seasonal adjustment is from January 1996 to the most recent December. For the year starting after the most recent December, seasonally adjusted figures are calculated by applying the predicted seasonal factor.
BOP statistics are aggregated by country and region, and data for 33 major countries and regions are released. Trade balance regional breakdown is compiled from the trade statistics of the Ministry of Finance. In principle, exports are classified by country of final destination, and imports are classified by country of origin. Other components of the current account are, as a rule, classified according to the transactor principle.
Financial and capital account is basically classified according to the debtor/creditor principle. (However, the liabilities side of portfolio investment is classified according to the transactor principle.)
External Assets and Liabilities of Banks, etc.
"External assets and liabilities of banks, etc." covers the external assets and liabilities of resident banks in Japan (Japanese banks and branches of foreign banks in Japan) as aggregated from their balance sheets (reports concerning assets and liabilities submitted by banks and others). The statistics are broken down as follows: by assets and liabilities, by long-term and short-term, and by foreign-currency denomination and yen-denomination. External assets and liabilities of banks, etc. are released monthly at the same time with the BOP statistics.
International Investment Position
"International investment position" is closely related to the balance of payments. Transactions of financial assets respectively held by residents and nonresidents (flow data) are recorded in the BOP statistics under financial and capital account and changes in reserve assets. For its part, the stock of overseas financial assets held by residents (external assets), and the stock of financial assets held in Japan by nonresidents (external liabilities) at a specific point in time are recorded in the international investment position. Changes occurring in the international investment position during a given period of time reflect transactions, revaluations caused by the fluctuation of foreign exchange rate and market value, and other factors.
Japan's international investment position at year-end is released not later than the end of May of the following year. Additionally, preliminary estimates and revised estimates of major components as of the end of each quarter are released in the last month of the following quarter and the last month of two quarters afterwards, respectively.
Gross External Debt Position
"Gross external debt position" systematically summarizes, at a given time, the value and breakdown of gross liabilities of resident to nonresidents as measured at market value. The statistics are compiled and released on a quarterly basis, and data are broken down: by sector, by maturity, and by debt instrument.
Compared to the liabilities side of the international investment position, gross external debt position has the following characteristics: (1) greater frequency and promptness of release (preliminary estimates and revised estimates of all components as of the end of each quarter are released in the last month of the following quarter and the last month of two quarters afterwards, respectively); (2) information not available through the international investment position are provided from such perspectives as external debt burden and liquidity.(For details of the gross external debt position, see "Regarding the Dissemination of External Debt Statistics.")
Data may be revised due to changes in methodology and source data.