Settlement balance and international investment position...

Estimated balance sheet and international investment position of the country

The state bodies composing macroeconomic reports on the country's foreign economic activity, except for the balance of payments for the period, constitute the settlement balance for the period and as of a certain date.

The balance sheet for a period shows the dynamics of the requirements and obligations of one country in relation to other states and resembles the balance of payments. The main differences between them are as follows:

• the settlement balance includes the requirements and obligations of the country to foreign countries, including outstanding ones; the balance of payments reflects only the actual receipts and payments;

• The balance sheet includes all loans received and provided, including those that have not been included in the balance of payments;

• the final balance - active or passive - of the payment and settlement balances does not coincide and is usually the opposite. The settlement balances of the creditor countries (US, FRG, Japan, etc.) are usually active, and payment balances, especially for current operations, are periodically passive. In debtor countries, passive and settlement balances are sometimes combined with active balance of payments;

• Only the paid export and import are included in the balance of payments, and the settlement balance covers also the unpaid part of the turnover carried out on credit.

According to the settlement balance, built on the basis of "flows", it is impossible to reveal the monetary and financial situation of the country as a whole, for this purpose a settlement balance based on "stocks" is used; - on the date. Settlement balance at the date is the ratio of the country's requirements and liabilities to any date relative to other countries, regardless of the timing of payments. Such claims and liabilities arise from the export (import) of goods and services, the provision (receipt) of loans and credits. The concept of estimated balance for a date in modern economic practice is not used, the "international investment position" is used instead.

The difference in concepts arose due to the fact that over a long period of time the balance of payments consisted of settlement and credit balances. The settlement balance included the trade balance, the balance of services and the balance of transfer payments. The credit balance included the final balance of the settlement balance and capital account, which in turn was formed as the difference between export and import of capital and changes in gold and foreign exchange reserves.

The allocation of the international investment position (IIP) of the country from the balance of payments system is natural, as it indicates the strengthening of the credit nature of money, the growing role and importance of international reserves in the calculations and ensuring the economic security of the country. The international investment position is a statistical report reflecting the accumulated volumes of external financial assets and liabilities of residents of a country to non-residents at a certain point in time and allows assessing the effectiveness of economic transactions between residents of the country and the rest of the world . Unlike the international investment position, the payment battalion reflects changes that occur only as a result of economic operations over the period (Figure 18.4).

Relationship between the balance of payments and the international investment position of the country

Fig. 18.4. The relationship between the balance of payments and the country's international investment position

The international investment position shows the volume and structure of foreign assets of residents, i.e. requirements of residents to non-residents, as well as the volume and structure of foreign liabilities of residents. The Central Bank presents the results of the IIP of the country in the following form (Table 18.4).

Table 18.4

The structure of a net international investment position

Metric

Balance at the beginning of the period

Changes in result

operations

Changes

prices

Changes

Course

Other

Changes

Balance at the end of the period

A. Assets

Direct investment abroad

Portfolio investment

Financial derivatives

Other

Investment

Backup

Assets

In. Commitments

Direct investment abroad

Portfolio investment

Financial derivatives

Other

Investment

C. The net international investment position (A-B)

The rows of the table show the main classification groups •, external assets and liabilities that correspond to the articles of the financial account of the balance of payments and reflect functional categories. Assets are divided into direct investments, portfolio investments, financial derivatives, other investments and reserve assets; The same division applies to liabilities (other than reserve assets). The columns of the table in question reflect factors causing changes in the components of the international investment balance during the reporting period.

The columns reflect the state of external assets and liabilities at the beginning and end of the period, as well as changes in inventories as a result of real operations with the financial components of the IIP, price and exchange rate changes, and other changes due to:

- revision of the classification (for example, the transition from portfolio investments to direct ones due to an increase in the investor's share in the capital of the investee),

- unilateral cancellation of the debt by the creditor;

- other changes.

By comparing assets and liabilities, one can obtain a net international investment position of the country. The positive or negative final sign of the net IIP, which characterizes the relationship between the country's resources and its debt to other states, reflects the status of the country as a "net lender" or "net debtor", which plays an important role in the development of the economic policy of the state (development and implementation of economic stabilization programs, determination of the need for its financing).

The balance of payments and the international investment position of the country have a direct and inverse relationship with reproduction (see Figure 18.4). On the one hand, these forms are formed under the influence of processes that occur in reproduction, and on the other - affect it, because they affect the exchange rate relationships, gold and foreign exchange reserves, external debt, directions and efficiency of economic, including monetary, monetary , fiscal policy, the state of the world monetary system.

The country's net international investment position is equivalent to the share of national wealth provided or borrowed from the outside world (non-residents). Its calculation is carried out by adding the values ​​of the net international investment position and non-financial assets of the country. As you know, national wealth as a sum of net worth of the residents of the country is used to characterize the property situation of the country as a whole. Net capital cost as of a certain date is the difference between the value of non-financial assets of all economic entities located in the economic territory of the country (residents) and net requirements to other countries. The net value of claims to other countries, in turn, is defined as the difference between the value of foreign financial assets held by residents of a given country and the amount of foreign financial liabilities (liabilities) of residents of a given country relative to the rest of the world (Table 18.5).

Article & non-financial assets includes objects that are owned by institutional units and bring them real or potential economic benefits over a period of time as a result of their use and storage . Depending on the method of occurrence, such assets are divided into produced and non-produced non-financial assets.

Group Financial Assets Includes assets, most of which are requirements for other institutional units, i.e. they are resisted by financial obligations from other institutional units. In some categories of financial assets (monetary gold and special drawing rights), financial obligations are generally absent.

In the group " financial liabilities" for the corresponding liability item arise on the basis of a contractual relationship between two institutional units in the case where one institutional unit provides financial resources to another unit . In this case, the creditor's funds are one hundred financial assets, as it receives payments from the debtor for the use of the resources provided. For the debtor, the financial resources received are liabilities.

The article " monetary gold" reflects gold, universally recognized as an international payment instrument belonging to the country's monetary authorities or other units under their actual control and stored as a component of foreign exchange reserves. All the rest of the gold that other enterprises, institutions (including commercial banks) and individuals own, are commodities, inventories or valuables.

Article Special Drawing Rights (SDRs) includes special drawing rights that are created by the IMF as an international financial asset and distributed among its members in order to replenish the resources of that country. Special drawing rights represent the right to receive other reserve assets (foreign currency).

Cash as a financial asset include all banknotes and coins in circulation for making payments, regardless of whether they are a monetary unit of the country or other states. From the composition of the asset, coins that are not in circulation are excluded (for example, jubilee or collectable ones).

Deposits along with cash can be used as a means of payment and are included in the composition of the money supply, defined in a broad sense (monetary aggregate M2). Deposits can be used to make payments by obtaining cash from an account within the funds held by the deposit or by check.

The assets included in the group " securities other than shares", generally include securities that are sold and bought in financial markets and give them the right owners receive certain monetary incomes. Among the assets included in this group are promissory notes, bonds, debentures, etc.

In the article " loans and loans" reflect financial assets that are created when you provide funds to creditors directly or through brokers. At the same time, the relationship between the debtor and the creditor can be certified by appropriate documents, but the availability of such a security is not required.

Shares and other equity interests - are financial assets that represent ownership of the assets of a corporation (or quasi-corporation). They usually entitle their holders to share in the profits of the corporation (or quasi-corporation) and the proportion of inherited net assets in case of liquidation.

Insurance technical reserves are assets for insurance policyholders and liabilities for insurance companies, as well as for pension funds.

Other accounts of debtors and creditors Are financial assets in the form of trade credits, advances and other sources to obtain the necessary financial resources. They are created as analogs of a corresponding financial or non-financial operation in case of a discrepancy in time between this operation and the corresponding payment.

The group "Foreign direct investment" is allocated for the economy as a whole and for each sector of the economy for reference, since the corresponding financial assets and liabilities are accounted for in the above groups. However, determining the total amount of such investments is necessary to link the balance of assets and liabilities to other accounts and the balance of payments.

Table 18.5

Classification of assets and liabilities at the beginning (end) of the period included in the composition of national wealth

ASSETS

COMMITMENTS

1. Net CAPITAL CAPITAL at the beginning of the period

2. Changes in NON-FINANCIAL ASSETS

2.1. Produced assets

Tangible assets:

a) fixed assets

b) inventories of tangible working capital

c) values ​​

d) consumer durable goods (for reference)

Intangible assets (fixed assets):

a) costs of exploration of minerals

b) Computer software

c) original works of entertainment genre, literature and art

d) other intangible assets

2.2. Unproduced assets

Tangible assets:

a) land

b) Subsoil

c) Inexhaustible biological resources

d) water resources

3. Changes in FINANCIAL ASSETS

4. Changes in FINANCIAL LIABILITIES

3.1. Monetary gold and SDR

4.1. Monetary gold and SDR

3.2. Cash and deposits

4.2. Cash and deposits

3.3. Securities (other than shares)

4.3. Securities (other than shares)

3.4. Loans and Borrowings

4.4. Loans and Borrowings

3.5. Shares and other forms of participation in capital

4.5. Shares and other forms of participation in capital

3.6. Insurance technical reserves

4.6. Insurance technical reserves

3.7. Other accounts receivable (payable)

4.7. Other accounts receivable (payable)

3.8. Foreign direct investment (for reference)

4.8. Foreign direct investment (for reference)

5. Net CAPITAL COST at the end of the period (page 1 + page 2 + page 3 - page 4)

In the classification of financial assets, financial instruments are arranged in the order reducing the degree of liquidity. The greatest liquidity is those financial assets that can be exchanged on demand and without financial penalties for other assets, goods, services. These include gold, cash and deposits.

When calculating national wealth for the economy as a whole, only the balance of foreign financial assets and liabilities is taken into account, as financial assets and claims arising between sectors of the national economy are mutually repaid. Foreign balance showing the country's net international investment position, depending on whether it is positive or negative, the country is either a net creditor or a net debtor.

For a long period of time, financial assets and liabilities were not taken into account in the statistics of national wealth in many countries of the world (including the former USSR), since these assets were considered fictitious capital. However, as the credit nature of money intensifies, the analysis and monitoring of the international investment position by the central banks of the world's leading countries requires the identification of sources of acquisition of financial assets and financial commitments for an accurate assessment of the country's economic potential.

In order to make correct conclusions on the state of foreign economic relations of the state on the basis of the balance of payments and the international investment position of the country, it is necessary to analyze the mechanisms of the influence of certain economic phenomena and factors on the balance accounts, since they alone can not give us positive or negative assessments of certain events in the financial market.

The balance of payments and the international investment position of any country are formed under the influence of the development of the national economy and the world financial market. Hence the division of all factors that affect the state's macroeconomic reporting, both internal and external.

The main internal factors are: GDP growth rate, inflation rate, exchange rate dynamics, interest rates, the balance of the federal budget, the cyclical nature of the economy.

High GDP growth rates provide export growth and import growth, so that the surplus of the balance of payments increases. High rates of growth of the national economy create favorable conditions for attracting foreign capital. This, in turn, positively affects the financial account of the balance of payments and the growth of the assets of the investment position.

The acceleration of inflation in the country adversely affects its balance of payments. The increase in national prices reduces the competitiveness of national goods and makes it difficult to export them. At the same time, an increase in the level of domestic prices stimulates the import of goods. As a result, the negative balance of payments increases both due to the deterioration of the trade balance, and due to the outflow of capital from the country.

In conditions of floating exchange rates their increase or decrease has a key impact on the export-import balance of payments. The high current level of the national currency rate hinders the conduct of export operations and facilitates the conduct of import operations. The low exchange rate, on the contrary, promotes exports and prevents imports. The instability of the world monetary system worsens the conditions for international trade and settlements. In anticipation of fluctuations in the exchange rate of the national currency, the timing of payments for exports and imports is shifting. While expecting a depreciation of the national currency, importers are trying to accelerate payments, and exporters, on the contrary, delay the receipt of foreign currency. With the forecast of appreciation of the national currency - all the way around.

Similar influence is exerted by the exchange rate on international reserves. The high exchange rate of the national currency reduces the value of international assets and reduces the amount of obligations paid by the country. In the event of a depreciation of the exchange rate, the value of liabilities increases, and the value of assets decreases.

The interest rate level affects international capital flows. The inflow of capital increases if the country has an increase in the level of interest rates and increases the profitability of national obligations. This is due to the desire of non-residents to profit from higher interest rates provided in the territory of this country. These operating flows are reflected in the balance of payments capital account. Countries with relatively low interest rates should expect an outflow of capital, which is due to the actions of investors who seek to maximize their profits.

The final result of the information on revenues and expenditures (budget ) of the state has a direct correlation with the balance of payments. In the event that the country has a high elasticity of budget revenues from price changes in world markets, the budget surplus is formed mainly due to the inflow of foreign currency earnings to the country from the sale of exported products. In the event of a deficit in the state budget, the main efforts of the state are aimed at eliminating it. One of the possible ways to overcome the budget deficit is external borrowing. As a result, the financial account of the balance of payments is improving, but only in the short term. In the medium and long term, the situation is reversed, as debt and interest are paid on it.

In the balance of payments of the country, there are expressions of fluctuations, ups and downs of economic activity in the country. Fluctuations in the balance of payments, due to the mechanism of industrial cycles, facilitate the transfer of intraeconomic cyclical processes from one country to another. The increase in production causes an increase in imports of fuel, raw materials, equipment, and with a slowdown in economic growth, imports of goods are declining. Export of goods, capital, services is more responsive to changes in the conditions of the world market. With sluggish economic development, the export of capital usually increases. With the accelerated development of the economy, when the profits grow, the credit expansion in the country increases, the interest rate rises, and the export of capital falls.

The main external factors, affecting the balance of payments and the country's international investment position include: changes in the development of the world economy and the international financial market; international markets, the principles of international valuation of assets and liabilities, methods of insurance of assets and liabilities from risks.

Among the external factors, the dynamics of world prices for energy resources are the main ones. The increase in these prices leads to an increase in foreign exchange earnings from the export of energy resources and the growth of the trade balance. On the contrary, the decline in prices is accompanied by a decrease in the country's trade balance.

A powerful external factor that influences the balance of payments and the country's international investment position is changes in the functioning of the global financial market and, first of all, the world financial crises as the most acute form of these changes. The influence of this factor on the balance of payments is due to the close relationship between the national and global economies.

The balance of the international debt is widely used in the statistics of developed countries. It is close to the international investment position (the settlement balance sheet as of the date) and includes all the financial and property assets and liabilities of the state available to this date in relation to other states, regardless of time and maturity.

It is the central bank that compiles the balance of the country's international debt. The format for the presentation of the international debt balance by maturity and its currency structure is as follows (Table 18.6).

Table 18.6

Currency structure of external debt (as of January 1 of the year)

Metric

Foreign

Currency

United States

rubles

The whole debt

billion

$.

%

billion

$.

%

billion

$.

%

STATE SECTOR

Bodies of Monetary Regulation and Public Administration

Short term

long-term

Banks (without participation in capital)

Short term

long-term

Other sectors (without equity participation)

Short term

long-term

PRIVATE SECTOR

Banks (without participation in capital)

Short term

long-term

Other sectors (without equity participation)

Short term

long-term

EXTERNAL DEBT

In the asset of the international debt balance includes: enterprises, real estate, stocks, bonds, bills, current accounts, various property, which citizens and organizations of the country own abroad, payments on reparations and indemnities due to this state.

In the balance sheet of the international debt includes property and claims belonging to foreign nationals and organizations in the state on the same date.

It should be noted that the methodological basis for the compilation and presentation of the main balances of international settlements, characterizing the results of foreign economic operations of the country with the rest of the world, are the recommendations of the IMF. The Sixth Edition of the Balance of Payments and International Investment Position Guidelines established rules for the compilation and presentation of macroeconomic reports and their relationship with related sections of economic statistics (national accounting system, monetary statistics, public finance statistics).

Previously, the balance of international debt was represented by the credit balance, which showed changes in receivables and payment obligations between the country and foreign partners as a result of the spread of credit relations. The credit balance included the balance of capital flows and the balance of the country's foreign trade balance. In the event that the receivables exceeded liabilities, net assets in foreign currency were formed; if liabilities exceeded accounts receivable, net assets in foreign currency in the central bank declined and net liabilities formed.

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