Chapter

7. Valuation of Assets and Liabilities in FDI Position Data

Author(s):
International Monetary Fund
Published Date:
October 2003
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7.1 In principle, all external financial assets and liabilities should be valued at the market prices prevailing on the date they are recorded in the FDI statistics. However, there are some recognized departures from the market-price principle. For direct investment, values recorded in the balance sheets of direct investment enterprises (book values) are often used to determine the value of the stock of direct investment. If these balance-sheet values are recorded on the basis of market prices prevailing on the balance sheet date, such values are generally in accordance with the market-valuation principle. However, if balance sheet values are based on historical cost or on interim, but not current, revaluations, such balance-sheet values do not conform with the market-valuation principle.

7.2Table 7.1 shows the primary method used in 2001 and 1997 to value equity capital assets and liabilities in the inward FDI position data. Table 40 of Appendix I provides details by country for 2001 for both the inward and outward FDI position data, broken down into both equity capital and other capital. Table 7.1 indicates that while there has been a significant increase since 1997 in the number of countries that value their equity capital positions at market values, 59 percent of the 51 countries that compile inward position data still value these positions solely at book values.

OECD countries

7.3 Only nine OECD countries record both their inward equity capital positions and inward other capital positions at market values—Australia, Austria, Belgium, Italy, Mexico, New Zealand, the Slovak Republic, Sweden, and the United States. (In the case of Austria, estimates at market values are disseminated in addition to data recorded at book values. Sweden disseminates data on its equity capital positions at both market values and book values. The United States disseminates only aggregate data at market values, while the detailed data are compiled at book values [historical costs].) In addition, France records its equity capital positions, but not its other capital positions, at market values, and Spain records its other capital positions, but not its equity capital positions, at market values. All other OECD countries value their inward equity capital and other capital positions at book values. The numbers for the outward FDI position data are similar.

Other countries

7.4 Nine of the 23 countries that compile inward FDI position data record both their inward equity capital and inward other capital positions at market values—Botswana, Croatia, Hong Kong SAR, Israel, Malaysia, Russia, Singapore, South Africa, and Thailand. (In the case of Israel and Singapore, only the listed companies are recorded at market values, and unlisted companies are instead recorded at book values. South Africa records only part of its equity capital at market values.) Estonia and Kazakhstan record their equity capital positions, but not their other capital positions, at market values. All other non-OECD countries value their equity capital and other capital positions at book values. The numbers for the outward FDI position data are similar.

Table 7.1.Valuation of Equity Capital Positions
Number of CountriesCountries That Value Their FDI Equity Capital in the Inward Position Data Using:
Market valuesBook values
Total 2001 (61)21*36*
Total 1997 (61)836
Change+130
OECD 2001 (30)10*21*
OECD 1997 (29)319
Other 2001 (31)11*15*
Other 1997 (32)517

Some countries value their inward equity capital position data using both market values and book values or a mixture of market values and book values.

Some countries value their inward equity capital position data using both market values and book values or a mixture of market values and book values.

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