Statistical Treatment of Accrual of Intereston Debt Securities

September 1, 2001

Preview Citation

Format: Chicago

Chris Wright, and John Joisce. Statistical Treatment of Accrual of Intereston Debt Securities, (USA: International Monetary Fund, 2001) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

When new international statistical standards were published in 1993, one of the major changes to the recommended presentation of the system of national accounts and the balance of payments was the adoption of accruals reporting for income and expenditure. However, as countries have begun to implement these standards, questions have arisen about their exact interpretation in respect of interest flows associated with tradable debt, where the cash flow is fixed at the time of issue but where the price of the instrument fluctuates with market conditions. A clear consensus has yet to emerge. The paper explores the issues involved in using the alternative approaches, the so-called "debtor" and "creditor" approaches. The debtor approach uses the rate implicit at the time of issue, and the creditor approach, the current market rate. The paper concludes that the creditor approach is the only one consistent with accrual principles and market valuation for the debt outstanding. It reviews implications for national and sectoral saving from this approach.

Subject: Bonds, Financial institutions, Financial statements, National accounts, Personal income, Public financial management (PFM), Securities

Keywords: Accounting practice, Accrual, Balance of payments, Bonds, Current yield, Debt security, Fair value, Financial statements, Government finance statistics, Historical cost, Income stream, Interest, Interest income, Market condition, Market price, National accounts, Personal income, Securities, WP

Publication Details

Pages:

42
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/132
Stock No:

WPIEA1322001
ISBN:

9781451855388
ISSN:

1018-5941

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