National financial accounts for the Portuguese economy – statistics on financial assets and liabilities for 1999-2004
In June 2005 the Banco de Portugal began publishing a new set of statistics covering financial transactions in the Portuguese economy. The set can be found in Chapter F, National financial accounts. It was announced at the time that regular annual information on financial stocks would later be made available, detailing end of period positions for financial assets and liabilities. This is now coming on stream and forms a separate section of Chapter F (Section F.2, National financial accounts–Financial Assets and Liabilities). This new set of tables follows the layout of the tables used for financial transactions in section F.1 and covers the 1999-2004 period.As explained in Supplements 2/2005 (1) and 3/2005 (2) to the Statistical Bulletin, the system of National Financial Accounts includes two kinds of information, flows and stocks. The second of these are also known as positions and correspond to financial assets and/or liabilities held at the end of each accounting period. One of the main aims of financial accounts for stocks is to ascertain the net financial assets for each institutional sector, that is, the difference between financial assets and liabilities. The differences in financial assets and liabilities at two distinct moments in time stem from two sources: the financial transactions carried out during the period; and other changes in volume or value such as those that derive from exchange rate or stock market fluctuations.
Financial assets and liabilities should be recorded at market value. Assets relating to Shares and other equity, for instance, are recorded according to listing if quoted and following the own funds (3) concept otherwise. Assets relating to Shares and other equity, for instance, are recorded using stock market prices for listed shares and the own funds concept for shares not listed and for other holdings. Another case of mark-to-market valuation relates to the recording of financial assets which earn interest on an accrual basis.
A sector with positive/negative net financial assets means that it is a creditor/debtor when measured in terms of financial assets and liabilities. The net financial assets do not of course reflect all the stocks of a given sector, since it is likely to include real assets. In simple terms, the negative position, which is a normal business feature, can be seen as counterbalanced by real assets, obtained either through capital formation or the accumulation of non-produced real assets such as land. On the other hand, households–the sector with most company ownership–traditionally have positive net financial assets, although real assets such as real estate are also involved, along with financial assets and liabilities.
There follows a short presentation of the main statistical findings relating to financial assets and liabilities.
The findings for the 1999-2004 period confirm that Households and the Rest of the world are the sectors with positive net financial assets (as a consequence also of their being the main financing agents of the economy). Corporations, above all Non-financial corporations, along with General government (to a lesser extent) are those with negative net financial assets. Over the five-year period under review, the net financial assets of Households and the Rest of the world rose, while Non-financial corporations and General government fell.
