- Oct. 22, 2021
- Oct. 22, 2021
- Oct. 22, 2021
Home > Statistics > Outline of Statistics and Statistical Release Schedule > Explanations of Statistics > FAQs on the Balance of Payments Related Statistics
Bank of Japan
The term "balance of payments (BOP) related statistics" refers to the BOP (which records Japan's external economic transactions), the international investment position (IIP, which records Japan's assets and liabilities vis-à-vis other countries), and more detailed data of the BOP and IIP statistics such as breakdowns by partner economy.
The BOP is a set of statistics that systematically record Japan's economic transactions with the rest of the world. Specifically, the BOP records transactions in goods and services, investments in securities and other financial transactions, payments and receipts of investment income, the flow of settlement funds associated with these transactions, and other items. The IIP is a set of statistics that show the value and composition of Japan's external financial assets and liabilities. For both the BOP and IIP statistics, detailed data including major components by partner economy, direct investment by industry, and portfolio investment etc. by currency, are also provided.
The BOP related statistics provide useful data for various types of economic analysis, such as analyses of developments in external economic transactions and cash flows or of vulnerabilities in terms of the structure of external assets and liabilities. In addition, the BOP related statistics serve as fundamental statistics for the compilation of the System of National Accounts statistics (GDP statistics) and the Flow of Funds Accounts statistics.
In terms of the institutional framework, member countries of the International Monetary Fund (IMF) are obliged to provide BOP-related information under the provisions of Article VIII (General Obligations of Members), Section 5 of the Articles of Agreement of the IMF.
In Japan, under the Foreign Exchange and Foreign Trade Act (FEFTA), the Minister of Finance must prepare (1) statistics on foreign borrowing and lending (i.e., the IIP) as of December 31 of every year and (2) monthly and annual statistics on the BOP, and report the annual figures to the Cabinet by May 31 of the following year (Article 55-9 of the FEFTA and Article 18-9 of the Foreign Exchange Order).
The Minister of Finance may delegate administrative affairs related to the FEFTA to the Bank of Japan (Article 69 of the FEFTA). The Bank has been entrusted by the Minister of Finance with the administrative affairs related to compiling the BOP related statistics and collecting reports used for the statistics (Article 26 of the Foreign Exchange Order and Article 38 of the Ministerial Ordinance concerning Reports on Foreign Exchange Transactions etc.).
Japan's BOP related statistics are compiled in accordance with the IMF's Balance of Payments and International Investment Position Manual (BPM).
The BPM is a guide prepared by the IMF to facilitate the compilation of the BOP and IIP statistics. The BPM stipulates, for example, statistical concepts, definitions, classifications, and valuation methods, and serves as a basis for the reporting of data to the IMF by member countries. The first edition was disseminated in 1948, which has been updated several times, with the most recent one being the sixth edition (BPM6) (link to an external website) published in 2008. Japan's BOP related statistics are compiled based on the BPM6 for data from January 2014 onward.
Discussions on updating the BPM6 have started in 2020, with a target of publishing an updated version in 2025.
The BPM6 broadly divides the statistical items into "standard items" and "supplementary items." The standard items should be compiled and reported to the IMF as completely as possible, while the choice of whether to compile the supplementary items is left to each country, depending on the country's political and analytical needs as well as resource costs. Standard items that contribute to the totals and balancing items are called "standard components," and standard items that are not used for calculating totals and balancing items but are compiled from a different perspective are called "memorandum items."
Data by partner economy are treated as supplementary items in the BPM6.
In the BOP statistics, each transaction consists of two entries, a credit entry and a debit entry, of equal value, and the sum of the credit entries and the sum of the debit entries are in principle the same (i.e., double-entry accounting is used). The following are recorded as credits: exports of goods and services, income receipts, transfer receipts, decreases in financial assets, and increases in liabilities. Conversely, the following are recorded as debits: imports of goods and services, income payments, transfer payments, increases in financial assets, and decreases in liabilities.
Balances are obtained as follows. The current and capital accounts are calculated as "credit minus debit." If the value is positive, this is referred to as a "surplus," and if it is negative, this is referred to as a "deficit." The financial account is calculated as "net acquisition of financial assets (debit minus credit in assets) minus net incurrence of liabilities (credit minus debit in liabilities)." If the value is positive, this is referred to as "net lending," and if it is negative, this is referred to as "net borrowing." By definition, the following identity holds:
Current account balance + Capital account balance - Financial account balance + Net errors and omissions = 0
"Net errors and omissions" are an adjustment item to account for statistical errors. In compiling the actual BOP statistics, it is not always possible to collect information on the credit and debit side of a certain transaction within the same period, given that the vast number of transactions are aggregated based on various types of reports and sources. In addition, even for the same transaction, the amounts recorded in different sources may disagree due to different valuation methods. For this reason, in practice, the totals on the credit and the debit side do not agree with each other, resulting in errors in the compilation of the statistics.
The asset and liability principle and the directional principle are recording principles under which direct investment data are presented. Data compiled under the asset and liability principle show assets and liabilities on a gross basis, while under the directional principle "investments from an affiliate to its parent company (i.e., reverse investments)" are deducted from "investments from a parent company to its affiliate."
The asset and liability principle is employed in the standard presentation of data under the BPM6. Since such data show gross assets and liabilities, they allow comparisons of different items under assets and liabilities.
The directional principle is employed, along with the asset and liability principle, in the standard presentation of data under the OECD Benchmark Definition of Foreign Direct Investment, Fourth Edition (BD4). While investments from a parent company to its affiliate show the acquisition of influence through the provision of financing, reverse investments reflect the parent company's use of its influence to have its affiliate provide financing for its own operations. The BD4 recommends using the directional principle especially for the compilation of data on direct investment by industry and by partner economy. In Japan, while data on direct investment flows and positions by region and industry are compiled based on the directional principle in line with the BD4, those on direct investment income by region and industry are compiled based on the asset and liability principle due to limitations in the source data.
See Recording Principles of Direct Investment for a list of statistics compiled under each principle and an example of the way transactions are recorded.
One of the factors responsible for changes in the IIP is transactions in external assets and liabilities, which correspond to the financial account of the BOP. The IIP also reflects, for example, changes in exchange rates and other market prices such as of stocks and bonds. In the Year-on-Year Changes in the IIP by Factor (Estimates), changes in the IIP are decomposed into (1) changes due to transactions, (2) changes due to exchange rate changes (estimates), and (3) changes due to other changes (residuals).
Incidentally, as the accounting identity in Question 6 shows, the financial account balance in the BOP statistics in theory equals the sum of the current account balance -- which comprises goods, services, primary income, and secondary income -- and the capital account balance.
Meanwhile, income arising from external financial assets and liabilities is recorded as investment income under primary income.
Figure 1: Relationship between the BOP and the IIP
Transactions in the current and capital accounts are in principle classified according to the economy of the counterparty. However, transactions in goods passing through Japanese customs, which are recorded based on the Trade Statistics of Japan, are classified according to the economy of final destination for exports and the economy of origin for imports (see section 7-2 of the Order of Director General of the Customs and Tariff Bureau) (available in Japanese only).
As for transactions in the financial account, those on the asset side are classified according to the economy of the debtor. Although transactions on the liability side are in principle classified according to the economy of the creditor (investor), the following should be noted for portfolio investment. Transactions under portfolio investment liabilities (i.e., transactions in securities issued by Japanese residents) are classified according to the economy of the transactor. Specifically, when a nonresident investor trades Japanese securities via a foreign securities firm, the economy of the firm -- not of the investor -- is regarded as the economy of the transactor. In addition, when Japanese securities are redeemed via a foreign custodian, the economy of the custodian is reflected in the data.
IIP data by partner economy are in principle classified similarly to the financial account. While portfolio investment liabilities are basically classified according to the economy of the holder, when an investor deposits Japanese securities via a foreign custodian, the economy of the custodian may be reflected in the data. Furthermore, the Regional Direct Investment Position (Inward Investment) (Ultimate Investor) is classified according to the economy in which the investor holding ultimate control -- not the immediate parent company -- resides.
In principle, data by partner economy are provided for 33 major economies (except for portfolio investment flows, for which data for 45 economies are provided). However, the Direct Investment Flows by Region and Industry and the Regional Direct Investment Position and Regional Portfolio Investment Position (Assets) (All Regions) statistics show figures for all economies for which data are available.
See Breakdown by Partner Economy on the Balance of Payments Related Statistics page for details.
In principle, data by industry are compiled according to the activities of the investee: data for outward direct investment are classified based on the industry of the nonresident investee such as foreign subsidiaries, and data for inward direct investment are classified based on the industry of the resident investee. However, income data are classified based on the industry of the payer.
The industry classification is shown in Table 1.
|Manufacturing||Food; textile; lumber and pulp; chemicals and pharmaceuticals; petroleum; rubber and leather; glass and ceramic; iron, non-ferrous, and metals; general machinery; electric machinery; transportation equipment; precision machinery; and other manufacturing|
|Non-manufacturing||Farming and forestry; fishery and marine products; mining; construction; transportation; communications; wholesale and retail; finance and insurance; real estate; services; and other non-manufacturing|
Although this classification is broadly based on the divisions (and major groups for manufacturing) in the Japan Standard Industrial Classification (JSIC), the classification has been modified and is unique to Japan's BOP statistics in order to, for example, ensure the confidentiality of information on individual companies and the continuity of statistics. The main industries (corresponding to 4-digit industries in the JSIC) included in each broad industry group are shown in the list of industry codes [PDF 535KB] (available in Japanese only). However, holding companies are classified based on the industry of their major subsidiaries.
For manufacturing, data for "manufacturing (total)" and each of the industries above excluding "other manufacturing" are provided. For non-manufacturing, data for "non-manufacturing (total)" and each of the industries above excluding "other non-manufacturing" are provided.
Since the classification of direct investment by region and industry is more granular than other statistics, the number of reports submitted for data items falling under some categories may be zero or so small that disseminating aggregated data might still reveal information on individual companies. Thus, data items for which no reports were submitted are denoted with "." and those for which fewer than three reports were submitted are denoted with "X."
In the financial account of the BOP and IIP, figures for "portfolio investment," "financial derivatives (other than reserves)," and "other investment" are classified in terms of the following institutional sectors that residents (creditors in the case of assets and debtors in the case of liabilities) belong to: "central bank," "deposit-taking corporations, except the central bank," "general government," "other financial corporations (OFCs)," and "others."1
In addition, for Portfolio Investment Assets by Type of Investors, the "deposit-taking corporations, except the central bank" and "other financial corporations" sectors are further classified into detailed categories.
Table 2 shows the entities that fall under each category. However, holding companies are classified based on the sector and type of their main subsidiaries.
|Sectors and investor types||Entities|
|Central bank||Bank of Japan|
|Deposit-taking corporations, except the central bank||Banks (banking accounts), Trust banks (banking accounts)||Financial institutions that are allowed to accept deposits or conduct exchange transactions as their business, i.e.:
|OFCs||Banks (trust accounts), Trust banks (trust accounts)||
|OFCs||Financial instruments firms||
|OFCs||Life insurance companies||
|OFCs||Non-life insurance companies||
|OFCs||Investment trust management companies||
|Others||Those not covered by the above categories, including the following:
An overview of recent data can be found on the Ministry of Finance's website. Time-series data are available in the BOJ Time-Series Data Search.
For details, see Access to Data on the Balance of Payments Related Statistics page.
The BOP related statistics are compiled from reports submitted under the Foreign Exchange and Foreign Trade Act (FEFTA), data prepared by authorities, and other data. For flow data compiled on a monthly basis, certain source data, such as quarterly surveys, are institutionally unavailable in time for the release of preliminary figures. In such cases, estimates are used in preparing the preliminary figures and actual data are incorporated in the second preliminary figures. (However, reinvested earnings are adjusted separately, as explained in Question 17.) Moreover, the second preliminary and annually revised figures incorporate reports that came in late or were corrected after the previous release.
As most data sources for stock data are annual reports as of calendar year-end, quarterly stock data are estimated reflecting flows and fluctuations in exchange rates and other prices following the end of the previous period. Preliminary estimates, revised estimates, and annually revised figures of the stock data in principle reflect the preliminary, second preliminary, and annually revised flow data, respectively, while calendar year-end stock data excluding preliminary estimates are aggregates based on the reports. Differences between the preliminary estimates and the aggregated data based on the reports for the calendar year-end data are regarded as estimation errors resulting from the adding up of flow data and are redistributed across quarters in the annual revisions.
However, in the event that major corrections are made to reported data, retroactive revisions may be made separately from the regular revisions, in which case certain data such as data by partner economy and by currency may not be corrected. For items subject to correction, see Notices of Corrections on the Balance of Payments Related Statistics page.
Reinvested earnings is associated with the concept of attributing the retained earnings of direct investment enterprises (DIEs), such as subsidiaries, to direct investors (parent companies). That is, the part of the retained earnings of DIEs that belongs to direct investors are treated as being distributed to the investors, who then are deemed to reinvest the earnings back. The imputation of income to direct investors is shown in the primary income account as "reinvested earnings" and the corresponding flow is recorded in the financial account as "reinvestment of earnings."
The data source for reinvested earnings is reports based on firms' financial statements. Retained earnings for a certain accounting year are deemed to be earned equally over that year, and one twelfth of the retained earnings are recorded every month of the year.1 As the financial statements are unavailable until firms' accounts are settled, in Japan's statistics, figures are first compiled based on the most recent reports from firms whose accounting year ends in March -- which constitute the large majority in Japan -- and are then replaced with the data for the relevant period in which the earnings accrue when the reported amounts are aggregated. Such revision is conducted in November of each year, when reports for firms whose accounting year ends in March become available for the statistics. For example, during the revision in November 2021, data through April 2020, when financial results for the accounting year ending in March 2021 start to be reflected, are replaced with the data for the relevant period in which the earnings accrue. The figures for April 2020 will be carried forward for May 2020 onward. For a concrete illustration showing the calculation and revision of reinvested earnings, see the Numerical Example [PDF 195KB].
For details of the revision schedule and items subject to revision, see Release Schedule on the Balance of Payments Related Statistics page.
Japan's BOP related statistics are compiled based on the IMF's Balance of Payments Manual (BPM) (see Tables 3-1 and 3-2 below). Since the compilation methods vary from one edition to another, historical data rearranged based on the subsequent edition are also provided. Currently, the following data are available on the Bank's website: (1) data based on the BPM6 (from 2014 onward), (2) data based on the BPM5 as well as historical data rearranged based on the BPM6 (from 1996 through 2013), and (3) part of the historical data that had been originally compiled based on the BPM4 and were rearranged based on the BPM5 (from 1985 through 1995 for major items and from 1991 through 1995 for the other items).
|Starting year of the data series1||--||1946||1957||1979|
|BPM5||Supplement to BPM5 3||BPM6|
|Starting year of the data series||1996||2002||2014|
|Starting year of the rearranged historical data series||1991 2
(1985 for major items)
(Most figures were retroactively revised)
The following is a description of the data series available in the BOJ Time-Series Data Search.
Japan's BOP related statistics switched over to a BPM6 basis for data from January 2014. With the switch-over, main data series originally compiled on the basis of the BPM5 were rearranged in accordance with the standards of the BPM6 and released as "historical data rearranged based on the BPM6." Also reflecting revisions of the recording period of reinvested earnings, the "historical data rearranged based on the BPM6" are available for data from January 1996 through December 2013 for the BOP and for data at year-ends 1996 through 2013 for the IIP. (The rearranged data are included in the "Balance of Payments [Data Based on the BPM6]" in the BOJ Time-Series Data Search.)
As for detailed data series of the BPM5-based statistics, flow data are in principle available in the "Balance of Payments (Data Based on the BPM5 [through 2013])" in the BOJ Time-Series Data Search, while position data and data on direct investment flows by region and industry are available on the Balance of Payments Related Statistics (Data Based on the BPM5) page. However, some of the BOP data, such as data related to direct investment and portfolio investment, are available from January 2005 (or the first quarter of 2005 or year-end 2005 depending on the frequency of the data), when such data series were developed or improved.
Moreover, the "Balance of Payments (Data Based on the BPM5 [through Dec. 2001, Provisional])" in the BOJ Time-Series Data Search contains part of the flow data before the revision of the statistical treatment of financial derivatives,1 including the historical data originally compiled based on the BPM4 and rearranged based on the BPM5 (data from January 1985 through December 1995 for main items and data for January 1991 through December 1995 for other items). Calendar year data of major items of the BOP from 1985 through 1995 that are included as reference in the "Historical Data Rearranged Based on the BPM6" are historical data compiled based on the BPM4 and rearranged based on the BPM5 that were further rearranged in accordance with the presentation of the BPM6.
For the periods covered by the data series and differences between them, see Overview of Data Available on the Bank of Japan's Website [PDF 307KB]. Moreover, for details of changes in the statistics, see the following documents:
In addition, calendar-year data in U.S. dollars for the current account and goods balances based on the BPM4 and earlier editions of the BPM are available in (Reference) Historical Data for Current Account and Goods Balances [XLSX 14KB].
The main differences between the BPM5-based statistics ("previous statistics" in this section) and the BPM6-based statistics ("current statistics") are as follows.
In the previous statistics, what is the "financial account" in the current statistics was divided into the "financial account" and "changes in reserve assets," while the "financial account" and the "capital account" were combined and called the "capital and financial account." Components currently labelled "primary income" and "secondary income" were called "income" and "current transfers," respectively.
In the current statistics, the financial account shows increases in assets and liabilities with a plus sign and decreases with a minus sign. By contrast, in the previous statistics, the financial account showed increases in assets with a minus sign and decreases with a plus sign, focusing on financial outflows/inflows. Moreover, the financial account showed net lending (net financial outflows) with a minus sign and net borrowing (net financial inflows) with a plus sign.
|Financial account in the current statistics||Financial account and changes in reserve assets in the previous statistics|
|Increases in assets = financial outflows||+||-|
|Decreases in assets = financial inflows||-||+|
|Increases in liabilities = financial inflows||+||+|
|Decreases in liabilities = financial outflows||-||-|
|Net lending = net financial outflows||+||-|
|Net borrowing = net financial inflows||-||+|
In the current statistics, the financial account of the BOP and the IIP consists of five institutional sectors: central bank; general government; deposit-taking corporations, except the central bank; other financial corporations; and others. In the previous statistics, the following three sectors were distinguished: public sector, banks, and other sectors.
In the current statistics, most data are compiled according to the asset and liability principle, except for such data as direct investment flows and positions by industry and region. In the previous statistics, most data were compiled according to the directional principle, except for direct investment income.
Main differences in the coverage and definition of components are as follows:
BPM6-based statistics are data compiled under the BPM6 framework. Meanwhile, historical data rearranged based on the BPM6 are data originally compiled under the BPM5 framework that have been rearranged to make them consistent with the BPM6-based statistics. In addition, the rearranged data are revised so that reinvested earnings are recorded when they accrue. Items for which source data were not collected under the BPM5 framework are therefore not included in the rearranged data.
The following lists major items that are not included and major changes in recording principles and compilation methods that are not reflected in the rearranged data.
See Details (Rearrangement of data) [ZIP 24KB] for further information on the rearrangement of data.
Data by partner economy and direct investment by region and industry are not available in the historical data rearranged based on the BPM6.
Meanwhile, the totals of BPM5-based data by partner economy for some components may differ from the corresponding figures in the rearranged data. In addition, the totals of BPM5-based data for direct investment by region and industry do not agree with direct investment in the rearranged data. The reasons for the discrepancies are as follows:
Data related to portfolio investment are not available in the historical data rearranged based on the BPM6. However, since flow data related to portfolio investment under the BPM5 framework were also compiled excluding securities lending and borrowing,1 it is possible, as with the rearranged data for other items, to compare portfolio investment-related data based on the BPM5 with portfolio investment-related data in BPM6 by reversing the signs for figures on the asset side (outward investment) and net portfolio investment (also see Question 19).
BOP and IIP data for each economy can be found on the BOP/IIP page of the IMF website (link to an external website). Although most economies report such data on a BPM6 basis, aspects such as the compilation method and frequency of dissemination may differ to a greater or lesser extent across economies. Information on how economies compile and release their BOP/IIP (i.e., metadata) is available on the BOP/IIP page and on the Dissemination Standards Bulletin Board (DSBB) of the IMF (link to an external website).
In addition, data and metadata on economies' gross external debt position are available on the website of the World Bank (link to an external website), while data and metadata on direct investment by partner economy and by industry are available on the website of the OECD (link to an external website).
The Coordinated Portfolio Investment Survey (CPIS) (link to an external website) is a project led by the IMF aimed at obtaining detailed data on economies' cross-border portfolio investment position. The IMF collects data and metadata from economies and releases them on its website, covering the period from year-end 2001 onward (semiannual data are available from end-June 2013 onward).
The Coordinated Direct Investment Survey (CDIS) (link to an external website) is a project led by the IMF aimed at obtaining detailed data on economies' cross-border direct investment position. The IMF collects data and metadata from economies and releases them on its website, covering the period from year-end 2009 onward.