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CBS, STATISTICAL ABSTRACT OF ISRAEL 2008

15

2008

BALANCE OF PAYMENTS

SUMMARY OF THE BALANCE


OF PAYMENTS

Note: In the balance of payments data there


are updates for data from previous years as
well as for current data. Therefore, there are
no markings of R (revised data) or *
(provisional data), even when there have
been changes in the data.

(Tables 15.1-15-3)
DEFINITIONS AND EXPLANATIONS
The balance of payments is compiled
according to the rules recommended by the
International Monetary Fund (IMF) (Balance of

CURRENT ACCOUNT
This account includes four secondary
accounts:
1. Goods Account: transfer of ownership
of goods between Israeli and foreign
residents.
2. Services Account: provision of services
between Israeli and foreign residents.
3. Income
Account:
income
and
expenditure between Israeli and foreign
residents, such as investments and
labour compensation. Income and
expenditure on investments include
interest, dividends and undistributed
profits.
Compensation of employees: (Table
15.2) is defined as the total expenditure
for
wages
and
salaries
and
supplementary expenditures for wages
and salaries, see detailed definition in
the paragraph Definitions of Wages,
Compensation and Labour Cost in
Chapter 14 - National Accounts.
4. Current Transfers Account: current
transfers between Israeli and foreign
residents, that do not entail any
obligations on the one receiving the
transfer.
In the goods items, values are recorded on
an f.o.b. basis (free on board), i.e., without
expenditure on transport and insurance.
These services, if they are to be included in
the balance of payments, are listed in the
respective service items.

Payments Manual, 5th Ed. International Monetary Fund,


Washington D.C., USA, 1993) and is defined as a
systematic
record
of
all
economic
transactions carried out in a given period
between the domestic economy and the rest
of the world.
Since the 1999 Statistical Abstract, the
balance of payments is shown in a new
format. This format, adopted by international
statistics agencies and by most countries,
allows convenient international comparisons
of balance of payment flows. Additionally, the
definitions and classifications in the new
format of the balance of payments have been
harmonized with those customary in the
National
Accounts,
thereby
obtaining
consistency between the international flows
and transactions and those in the National
Accounts.
Data since 1967 include estimates of
economic transactions between residents of
Israel and non-Israeli residents of Judea,
Samaria and the Gaza Area (and Sinai until

1982).

The Balance of Payments consists of three


main sections:
a.
The current account: includes trade in
goods and services, income and
expenditure from production factors capital and labour and current transfers;
b.
Capital
account:
includes
capital
transfers (mainly by immigrants),
c.
Financial account: includes direct
investments,
tradable
portfolio
investments, other investments and net
reserve assets.
BALANCE OF PAYMENTS

,''

CAPITAL ACCOUNT
The capital account includes capital transfers.
Most of the transfers in the capital account
are transfers to Israel by immigrants.
(113)

loans repayable after more than one year.


Due to lack of data, these deposits cannot be
classified according to date of repayment.
Liabilities of the economy include bonds and
shares issued by banks and distributed
directly abroad.
Total foreign liabilities also include changes in
obligations caused by fluctuations in the
exchange rate of various currencies in
relation to the US dollar, while in the balance
tables these changes were not included.

FINANCIAL ACCOUNT
The components of the financial account are
classified by types of investments (domestic
and foreign). A subsidiary classification is by
sector of the economy, which is further
classified by the legal repayment date for
liabilities and redemption of foreign assets.
This account includes 4 secondary accounts:
1.
Direct investment: The criterion
that distinguishes between direct investment
and portfolio investment is the share of equity
held by investors. The rule defined by
international institutions is that ownership of
one-tenth of equity or more makes the
investment a direct one. Ownership of less
than one-tenth of equity is considered a
portfolio investment.
2.
Portfolio
investment:
This
category reflects activity in the Israeli stock
exchange or in a foreign stock exchange. It
includes bonds issued abroad by the
Government of Israel, in addition to
investments at less than one-tenth of equity,
as
mentioned.
Financial
derivatives
instruments are also included here.
3.
Other investment: This subgroup
includes remaining types of capital flow such
as loans from various sources, deposits,
commercial credit, and advance payments on
account of transactions.
4.
Net reserve assets: Includes
changes in the balance of foreign currency,
which is held by the Central Bank abroad (not
revalued).

EXTERNAL ASSETS
(Table 15.5)

External assets refer to the foreign assets of


the various institutional sectors, including the
assets of financial institutions in Israel, the
Bank of Israel and the General Accountant.
The assets table also includes estimates of
the balance of Israeli investments abroad
from 1995 and after. This item does not
include the value of real estate purchased by
Israelis abroad.
SOURCES
Data included in the balance of payments are
based on concentrated reports of the Bank of
Israel (the Statistics and Information Section
and the Superintendent of Banks) and various
government offices, as well as on data
received from factors conducting economic
transactions with the rest of the world.
Because of the heterogeneity of the reports
obtained from various bodies, and delays in
closing financial accounts and balances, a
preliminary estimate of some items was
prepared in order to publish the report at
regular intervals. Consequently, balance of
payments
data
undergoes
additional
processing, examination and revisions after
publication.
More detailed explanations and information
on sources, methods and definitions have
been published in the Special Series
publications and in the Current Briefings in
Statistics Series (see Selected Publications
below).

EXTERNAL LIABILITIES
(Table 15.4)

This table presents Israels liabilities to


foreigners, whether the repayment is in
foreign or Israeli currency. The liabilities table
includes the investments of foreigners in
Israel as of 1995. This item does not include
real estate purchases in Israel. Foreign
liabilities are classified by date of repayment
set at the time the loan was obtained. A
short-term loan is defined as one repayable
within one year; and a long-term loan is one
repayable within a period exceeding one year.
Besides the distinction between liabilities by
date of repayment, the table classifies
obligations by sector that bears the debt, i.e.,
government,
the
private
sector,
or
commercial banks in Israel. Deposits of
foreign banks in local banks also include
BALANCE OF PAYMENTS

GOODS AND SERVICES,


BY INDUSTRY
(Table 15.6)

Table 15.6 presents data on the distribution


of exports of goods and services, by the
industry of the exporters. Export firms were
classified by their main activity, according to
(114)

the Standard Classification of Economic


Activities, second edition, 1993.

Israel, which holds one or more subsidiaries


abroad (holding over 50% of the share capital
of the subsidiary abroad).
Multinational Israeli Subsidiary (In
company): A company registered in Israel,
held by a Foreign Parent Company abroad or
by another foreign resident (holding over
50% of the share capital of the subsidiary in
Israel).
Israeli Parent Group (of an OUT
company): The group of all companies
registered in Israel, which are in a continuous
chain
of
ownership
(ascending
or
descending) at a rate exceeding 50% with
the Israeli Parent Company (the OUT
company), as defined above.
Foreign Parent Group (of an IN
company): The group of all companies
registered abroad, which are in a continuous
chain
of
ownership
(ascending
or
descending) at a rate exceeding 50% with
the Foreign Parent Company of an Israeli
Subsidiary (IN company), as defined above.
Other Associated Companies: Companies
registered abroad which are held by an Israeli
Parent Company (OUT company) at a rate
ranging from 10% to 50% of the share
capital, or companies registered in Israel and
held by a Foreign Parent Group, at the rates
mentioned above.

ACTIVITIES OF
MULTINATIONAL
ENTERPRISES IN ISRAEL
(Tables 15.7-15.9)

In recent years, the world economy has been


characterized
by
increasingly
open
international markets, by mobility of
resources, and by mutual dependence
among the various economies. One
important manifestation of these processes of
globalisation is the economic activity of
multinational enterprises. This activity has
been manifested in international trade,
financial investments, transmission of
knowledge, and distribution of production
among various countries.
As of 2002, estimates of this activity have
been conducted, and globalisation indicators
have been published in accordance with the
guidelines of the OECD which appear in the
Handbook on Economic Globalisation
Indicators, 2004.
Tables 15.7 and 15.8 present data on
international trade in goods and services
among multinational Israeli enterprises.
Table 15.9 presents data on sales of goods
and services by subsidiaries abroad of
multinational Israeli enterprises, by country.
Multinational Israeli Parent Company
(Out company): A company registered in

SELECTED PUBLICATIONS
SPECIAL PUBLICATIONS
Israel's Balance of Payments 1952-1992

959

CURRENT BRIEFINGS IN STATISTICS


Israels Balance of Payments, 2006

8, 2007

JUBILEE PUBLICATIONS (on the occasion of


Israels 50th year)
Balance of Payments (No. 5 in the series)

BALANCE OF PAYMENTS

(115)