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15
BALANCE OF PAYMENTS
DEFINITIONS AND EXPLANATIONS
The balance of payments is compiled
according to the rules set down by the
International Monetary Fund (IMF) (Balance of
Payments Manual, 5th Ed. International Monetary Fund,
and is defined as a
systematic
record
of
all
economic
transactions carried out in a given period
between the domestic economy and the rest
of the world.
Since the 1999 Abstract the balance of
payments is shown in a new format. This
format adopted by international statistics
agencies and by most countries, allows
convenient international comparisons of
balance of payment flows. Additionally, the
definitions and classifications in the new
format of the balance of payments have been
harmonized with those customary in the
National
Accounts,
thereby
obtaining
consistency between the international flows
and transactions and those in the National
Accounts.
Data since 1967 include estimates of
economic transactions between residents of
Israel and non-Israeli residents of Judea,
Samaria and the Gaza Area (and Sinai until
Washington, USA, 1993)
therefore, there are no markings of R
(revised data) or * (provisional data), even
when there are changes in the data.
CURRENT ACCOUNT
This account includes 4 secondary accounts:
1. Goods Account - transfer of ownership
of goods between Israeli and foreign
residents.
2. Services Account - provision of services
between Israeli and foreign residents.
3. Income Account
- income and
expenditure between Israeli and foreign
residents, such as investments and
labour compensation. Income and
expenditure on investments includes
interest, dividends and undistributed
profits.
4. Current Transfers Account - current
transfers between Israeli and foreign
residents, that do not entail any
obligations on the one receiving the
transfer.
In the goods items, values are recorded on a
f.o.b. basis (free on board), i.e., without
expenditure on transport and insurance.
These services, if they are to be included in
the balance of payments, are listed in the
respective service items.
1982).
The balance of payments report consists of
two main sections: a. The current account,
which includes trade in goods and services,
income and expenditure from production
factors - capital and labour and current
transfers; b. capital and financial account,
which includes capital transfers (mainly by
immigrants), direct investments, tradable
portfolio investments, other investments and
net reserve assets.
Compensation of employees: (Table 15.3)
see detailed definition in chapter “Definitions
of Wages and Labour Compensation” in
Chapter 14 - National Accounts.
Note: In the Balance of Payments data there
are current updates both for data from
previous years and for current data;
CAPITAL ACCOUNT AND
FINANCIAL ACCOUNT
The capital account includes capital transfers
(formerly included in unilateral transfers).
Most of the movements in the capital account
are transfers to Israel by immigrants.
The components of the financial account are
classified by types of investments (domestic
and foreign). A subsidiary classification is by
sector in economy, which is further classified
by the legal repayment date for liabilities and
redemption of foreign assets.
The main components of the financial
account are:
Direct investment - The criterion that
distinguishes between direct investment and
portfolio investment is the share of equity
held by investors. As a thumb rule, ownership
(104)
of one-tenth of equity or more makes the
investment a direct one, whereas ownership
of less than one-tenth of equity is considered
a portfolio investment.
Portfolio investment - This category reflects
activity in the Israeli stock exchange or in a
foreign stock exchange, and includes bonds
issued abroad by the Government of Israel, in
addition, as stated, to investments at less
than one-tenth of equity. Financial derivatives
instruments are also included here.
Other investment - This subgroup includes
remaining types of capital flows such as
loans from various sources, deposits,
suppliers’ credit, and advance payments on
account of transactions.
Net reserve assets - Includes changes in the
assets and liabilities of the central bank
abroad (not revalued).
ISRAEL'S FOREIGN LIABILITIES
(Table 15.5)
This table presents the obligations of the
economy to foreigners, whether the
repayment is in foreign or Israeli currency.
The liabilities table includes the investments
of foreigners in Israel from 1994 and after.
This item does not include real estate
purchases in Israel.
Besides the distinction between liabilities by
date of repayment, the table classifies
obligations by sector of the debtor, i.e.,
government, private or banking sector. These
obligations are also presented according to
date of repayment set down when the loan
was obtained. A short-term loan is defined as
one repayable within one year; and a longterm loan is one repayable within a period
exceeding one year.
Deposits of foreign banks in local banks also
include loans repayable after more than one
year. Due to lack of data, these deposits
cannot be classified according to date of
repayment.
Liabilities of the economy include bonds and
shares issued by banks and distributed
directly abroad.
Total foreign liabilities also include changes
in obligations caused by fluctuations in the
exchange rate of various currencies in
relation to the US dollar, while in the balance
tables these changes were not included.
ASSETS IN FOREIGN
CURRENCY
(Table 15.6)
Foreign currency assets include those held
by financial institutions in Israel, the Bank of
Israel and the General Accountant. The
assets table also includes estimates of the
balance of Israeli investments abroad from
1994 and after. This item does not include the
value of real estate purchased by Israelis
abroad.
SOURCES
Data included in the balance of payments are
based on concentrated reports of the Bank of
Israel (data of the Controller of Foreign
Exchange and the Superintendent of Banks)
and various government offices, as well as on
data received from factors conducting
economic transactions with the rest of the
world. Because of the heterogeneity of the
reports obtained from various bodies, and
delays in closing financial accounts and
balances, a preliminary estimate of some
items was prepared in order to publish the
report at regular intervals. Consequently,
balance of payments data undergoes
additional processing, examination and
revisions after publication.
More detailed explanations and information
on sources, methods and definitions have
been published in the Special Series
publications and in the Current Briefings in
Statistics Series (see below).
SELECTED PUBLICATIONS
SPECIAL PUBLICATIONS
959
Israel's Balance of Payments 1952-1992
CURRENT BRIEFINGS IN STATISTICS
14, 2005 Israel’s Balance of Payments, January-March 2005
JUBILEE PUBLICATIONS (on the occasion of Israel’s 50th
year)
Balance of Payments (No. 5 in the series)
(105)