The National Bank of Ukraine (NBU) has improved the calculation of foreign direct investment (FDI) statistics in line with international standards.
From now on, corporate reinvested earnings will be recognized in the balance of payments. In other words, foreign direct investors’ income will include not only dividend income, but also their share in corporate retained earnings.
These changes are in line with the IMF’s statistical standards and most countries’ practices. This approach will improve the comparability of Ukraine's macroeconomic indicators with those of other countries.
Reinvested earnings will not affect the overall balance of payments, as they will be reflected in two balance of payments items: Primary Income of the current account and Direct Investment of the financial account. Recognition of reinvested earnings adjusts Ukraine’s current account deficit and FDI by the same values.
Balance of payments data for Q1 2020, along with data for 2015−2019 revised according to the new methodology, are published in the Statistics Section of the NBU’s official website.
Under the new methodology, Q1 2020 saw net FDI outflows of USD 1.6 billion due to the withdrawal of the reinvested earnings of the real sector (whereas according to the previous methodology, there was a net inflow of USD 540 million).
The NBU’s updated macroeconomic forecast, with due account of these changes, will be published in the Inflation Report on 30 July 2020.
Please be reminded that the State Statistics Service of Ukraine has transferred its FDI data publishing function to the NBU starting in 2020. The first publication of direct investment statistics in terms of economic activities by country and region took place on 30 June 2020.
See details in the presentation on improving FDI statistics.