Flow of Presentation  Balance of Payments (BOP) Survey  Q & A  Annual System of National Accounts (SNA) Survey  Q & A

 What is BOP (balance of payments)?  A statistical statement in double entry format  Summarizes transactions between residents and nonresidents in a given period of time involving: > goods & services > primary (compensation of employees and returns to capital) > secondary income (transfers, grants and gifts) > financial assets and liabilities  What is IPP (international investment position)?  a statistical statement showing at a point in time the value of financial assets of residents of an economy that are claims on non-residents; and  the liabilities of an economy to non-residents.

 How much does Cayman’s residents receive from and pay to non- residents?  How important is Cayman to foreign investors?  Which transactions generate foreign currencies for the Cayman Islands for its residents’ various international business?  Do we have enough foreign currencies to pay for our trade?  What is the impact of global finance on Cayman’s foreign assets and liabilities?

 Economic policy makers and analysts o Monitoring balance of payments developments (changes in direct investment and portfolio flows) within the context of macroeconomic developments o Causes of payments imbalances and the means of financing o External debt developments: Net creditor / debtor position o Direct investment / trade

 Business o Financial markets, e.g, credit ratings o Market research  Academics

Residency  A resident is a household, enterprise or other entity that has a “center of economic interest” in the territory.  Residency concept is an economic concept; does not refer to nationality or citizenship.  Center of economic interest: presumed when entity is engaged in economic activities and transaction on a significant scale in the country for a long period of time (at least one year).  Dwelling, place of production, other premises, from which the unit engages in economic activities and transactions.

 Non resident: any individual, enterprise or other organization ordinarily domiciled in a country other than the Cayman Islands.  For CI BOP: enterprises registered or domiciled in the CI, but do not have physical presence in the CI are treated as non-residents. Eg. Trusts, mutual funds.

 Accounting Rules o actual market prices o accrual accounting  BOP: Transactions denominated in a variety of foreign currencies are converted into CI$ by applying the average exchange rates of the period for transactions.  IIP: Applying the exchange rates at the end of the period for positions.

 Every transaction involves either an exchange or a transfer. Exchanges: An exchange involves the provision of something of economic value in return for a corresponding item of economic value. o Exchanges of goods and services for financial items. o Payments for, or receipt of, primary income on, the factors of production (wages, salaries, interest income, dividends). o Barter (exchange of goods and services for other goods and services). o Exchanges of financial items for other financial items.

Transfer  involves a provision (or receipt) of an economic value by one party without receiving (or providing) a corresponding item of economic value.  Examples of transfers: taxes, debt forgiveness, grants in cash and kind, and personal gifts or donations in kind or cash.

 All flows are valued in monetary terms even if there is no money exchanged —barter, transfers in kind.  Stocks of financial assets should be valued at the market price prevailing on the balance sheet date  Transactions should be recorded at the prices at which goods, services and assets were bought and sold.

Exchange Rate Changes  National currency unit: CI currency for all macroeconomic statistics  Market exchange rates: used to convert stocks and flows denominated in foreign currency into domestic currency values.  Market exchange rates prevailing at the moment when the transaction or other flow occurred, or on the balance sheet date (for stocks).

 Only entities with foreign transactions are surveyed (about 1,000)  Each activity has its own questionnaire.  Forms basically follow the Income statement and the Balance sheet format.  Two types of data are requested: (1) Revenue from and payments to non-residents:  by type of service  by type of income  by type investment (2) Foreign assets and liabilities  by type investment  transactions  other changes

 Part A o Your company's earnings from non-resident individuals, companies or organizations.  Part B o Payments made by your company to non-resident individuals, companies or organizations. o For Parts A and B: report the total value of the services rendered or purchased during the reporting period even if actual payments were made in a later period. o The portion of the services rendered or purchased that was not paid during the reference period should be recorded in Part C under the respective instrument.  Part C o Information regarding the financial claims of your company on non-residents and the liabilities of your company to non- residents.

 A transaction is an interaction between two institutional units that occurs by mutual agreement or through the operation of the law and involves an exchange of value or a transfer.  Does not include changes due to other flows such as changes in the volume, value, or classification of an asset or liability that do not result from a transaction.

 Opening position: refers to the value of the claims and liabilities of your company and its resident subsidiaries at the beginning of the year. The opening positions you report should agree with the closing positions you reported for the previous year. If this is not the case, please provide data for the previous year.  Closing position: The value of the outstanding stock at the end of an accounting period, which equals the opening stock plus flows arising from transactions, revaluations, and other changes. Total of closing stocks = closing balance sheet.

These are:  Other flows which are changes in the volume, value, or classification of an asset or liability that do not result from a transaction between a resident and a nonresident.  Revaluations (holding gains and losses) on an asset or liability arise from changes in their prices and/or the exchange rates.

 Deadline for submission: 20 May 2016  For assistance or data request: Julietta Beaupierre:  ESO website: eso.ky