The National Bank of Ukraine (NBU) has improved the methodology for generating data on the banking sector’s foreign direct investments, including banks’ reinvested income, and conducted a relevant revision of external sector statistics for 2017.
The revision had no significant effect on external sustainability indicators – the 2017 current account deficit increased from USD 2.0 billion to USD 2.4 billion, or from 1.9% of GDP to 2.2% of GDP. At the same time, this operation was mirrored in the FDI line of the financial account, where the 2017 FDI value increased from USD 2.4 billion to USD 2.8 billion. As a result, the overall balance of payments for 2017 remained the same.
The calculation of reinvested income for the purpose of incorporating it into the balance of payments has been performed based on the net income from banks’ operations with direct investments in accordance with foreign direct investors’ participation interests in the banks’ capital. Reinvested income does not include the realized and unrealized gains/losses and provisions of holdings.
The NBU jointly with the State Statistics Service of Ukraine will further calculate the reinvested income of real sector enterprises and integrate it into external sector statistics.
In Q1 2018, the NBU also started to provide the State Statistics Service of Ukraine with data on the FDI of the banking sector for their further inclusion in the statistics on foreign direct investments. These data are generated based on the balance and financial statements of banks under the Balance of Payments and International Investment Position Manual.
See the presentation Improving the FDI Statistics: Incorporating Banks’ Reinvested Income and Clarifying the Balance of Direct Investment for further details on the methods and results of the data review.