Portugal - Current Account Balance

The balance of payments compilation is consistent with international standards and guidelines, namely with the fifth edition of the Balance of Payments Manual (BPM5), published by the IMF and the third edition of the OECD’s Benchmark Definition of Foreign Direct Investment.

According to the Balance of Payments and International Investment Position methodologies the following institutional sectors coverage should be considered: Monetary authorities - up to December 1998, includes the Banco de Portugal and the Treasury. From January 1999 onwards, includes only the Banco de Portugal. In accordance with the institutional arrangements in the Treaty establishing the European Community, namely its articles 105(2) and 116(3), only the Eurosystem, composed of the ECB and the national central banks participating in the single currency, has the exclusive right to hold and manage the official foreign reserves of the Member States from the beginning of Stage Three of EMU. General Government - from January 1999 onwards includes the Treasury. Other monetary financial institutions - does not include the Banco de Portugal; Other financial intermediaries and financial auxiliaries - includes, namely, Dealers, Wealth managing companies and Regional Development companies; Private individuals - includes household institutions ds and non-profits erving households.

A minus (plus) sign means a net increase (net decrease) on the assets and a net decrease (net increase) on the liabilities. The analysis of these items in net terms is particularly relevant when there are very significant transactions affecting both assets and liabilities. In these cases, only net figures will appropriately express the correct result, whereas the separate analysis of each component would be misleading.This situation has occurred mainly at the level of the direct investment item, where the separate analysis of Portuguese direct investment abroad and of foreign direct investment in Portugal has to be supplemented with the analysis of the total net direct investment item. This feature relates to the fact that there are direct investment transactions in both directions that balance each other, not resulting in a net investment in (or from) the Portuguese economy. This is the case in which a company resident in Portugal acts solely as an intermediary in a direct investment transaction between two foreigncountries. For example, if a nonresident company A invests in a resident company B and the latter invests in another nonresident company C, in practice the final net result will be an investment between nonresident companies (investment from A in C).

Data is subject to revision.