Balance of payments is a statistical report that reflects Latvia's economic transactions with other countries within a specific period. This report includes the transactions related to goods, services, income and transfers, and such net transactions that result in financial claims (Assets) or financial obligations (Liabilities) to the rest of the world.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

The Capital account covers Capital transfers and Non-produced non-financial assets.

Capital transfers are transactions where a resident, without any compensation, provides a non-resident with or receives from a non-resident financial or non-financial assets intended for investment.

Non-produced non-financial assets cover transactions with assets, which are used or are necessary for use in the manufacture of goods and provision of services but which are not produced, and transactions involving non-produced intangibles (patents, copyright, trademarks, franchise, etc).

Funds arising from transactions and receivable from non-residents are credited with a positive sign (+), whereas funds arising from transactions and payable to non-residents are debited with a negative sign (–).

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Institutions whose principal activity is issuing the national currency, preserving the internal and external value of the national currency and managing the country's international reserves or any part thereof.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Public institutions, including ministries, embassies, representative offices, agencies, councils, educational, healthcare, law enforcement, cultural and other public institutions whose competence covers the whole economic territory of a country. The Central Statistical Bureau of Latvia compiles the list of institutional units of the general government of the Republic of Latvia in accordance with the requirements of the European System of Accounts 1995.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community, except for money and banking statistics in Latvia, where the state social security funds are treated as part of central government.

Wages and salaries earned by non-residents in Latvia and by residents outside Latvia, including social security contributions to social security and pension funds made by employers on behalf of employees are also included.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Loans to households and non-profit institutions serving households for purchasing consumer goods, such as households appliances and cars, and paying for services, such as medical care and travels, that are not related to gaining profit. Consumer credits shall also include loans granted in compliance with the provisions of an agreement on using settlement accounts.

The definition of the concept is consistent with Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32).

Credits granted by an MFI to a household or non-financial corporation as a card holder at an interest rate of 0% in the period starting from the date of effecting the payment transaction with the card during one billing cycle and up to the date at which the debit balance from this billing cycle becomes due.

The definition of the concept is consistent with Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32).

Banknotes and coins in circulation issued by central banks or central government and commonly used to make payments.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

The current account shows exports and imports of goods and services, income and expense (wages and salaries, dividends, interest payments), as well as current transfers (European Union funds, contributions to the European Union budget, cash transfers of private persons, pensions, donations, taxes, etc) not intended for investment, in a specified period of time. Exports of goods and services as well as funds arising from other transactions recorded in the current account and receivable from non-residents are credited to the account with a positive sign (+), whereas imports of goods and services as well as funds arising from other transactions recorded in the current account and payable to non-residents are debited to the account with a negative sign (–).

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Transactions where a resident, without any compensation, provides a non-resident with or receives from non-resident goods, services, financial or non-financial assets not intended for investment. Current transfers fall into current transfers of the general government and current transfers of other sectors. Current transfers of the general government are those where either the donor or the recipient is the central government or local governments of Latvia.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Securities representing an obligation and a promise on the part of the issuer to make one or more payment(s) to the holder of the securities at a specified future date or dates (e.g. bonds, notes). Such securities usually carry a specific rate of interest (the coupon) or are sold at a discount to the amount that will be repaid at maturity.

Short-term debt securities are debt securities issued with an original maturity of up to one year (inclusive).

Long-term debt securities are debt securities issued with an original maturity of over one year.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Funds that are deposited with MFIs for a specified or unspecified period of time, with or without interest.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Funds that are deposited with an MFI without a specified maturity and may be withdrawn on demand either subject to notifying the MFI within an agreed period of notice or subject to payment of a substantial penalty (e.g. savings deposits).

The definition of the concept is consistent with Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32).

Investment (net transactions and positions) made by a foreign investor (direct investor) to obtain a lasting interest (ownership of at least 10% of the ordinary shares or voting power) in a Latvian company (direct investment enterprise; Direct investment in Latvia) or by a Latvian investor in a foreign company (Direct investment abroad). The components of direct investment are equity capital, reinvested earnings and other capital. Direct investment implies long-term relationship between a direct investor and direct investment enterprise. Direct investor can be either a natural or legal person.

Equity capital comprises shares (units) of direct investment enterprises and other capital investments. The acquisition of the historic investment and new investments in a direct investment enterprise are included.

Reinvested earnings are a part of an enterprise's profit or loss that belongs to the direct investor in proportion to its holding and remains at the disposal of the direct investment enterprise.

Other capital comprises trade credits, borrowing and lending transactions conducted between direct investors and direct investment enterprises, reciprocal acquisition and disposal of debt securities issued by direct investors and direct investment enterprises, as well as other assets and liabilities between a direct investor and a direct investment enterprise. Holdings of less than 10% of the direct investment enterprise in the enterprise of the direct investor are also reported as direct investment capital. To the extent possible, foreign direct investment in equity capital in Latvia is recorded at market value. The market value of investment in unlisted and listed companies is valued differently. Market values of investment in unlisted companies are obtained by using the equity capital approach (own funds at book value) recommended by the European Central Bank. Equity capital comprises shares and equity holdings (share capital), share premium, revaluation reserve of long-term investment, reserves, undistributed profit of previous years, and undistributed profit of the reporting year. The value of Equity capital is obtained as a difference between assets and liabilities for each provider of information from the Bank of Latvia's aggregated data on foreign investment and MFIs (excl. central bank) statistics. The value of one share (unit) is obtained from the total Equity capital book value. Only changes arising from transactions are recorded in the balance of payments, whereas the international investment position records all changes in investment positions resulting from all kinds of changes.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

The average weighted rates of the lats against the currencies of Latvia's major trade partners. They are used to measure Latvia's competitiveness in foreign markets and expressed as nominal effective exchange rate (NEER) and real effective exchange rate (REER) indices of the lats. The share of major trade partners in Latvia's foreign trade turnover is calculated on the basis of aggregated foreign trade statistical data compiled by the Central Statistical Bureau of Latvia and it represents the share of each trade partner in the foreign trade turnover of Latvia (goods imports plus goods exports with major trade partners). For 1996–2001, the share of trade partners is calculated as a three-year weighted average using the foreign trade statistical data of 1996–1998. The trade shares of the following periods are adjusted every three years, and the foreign trade statistical data of a previous three-year period is used as the basis in the calculation of the weighted average trade share for each current three-year period. NEER and REER indices are calculated against the currencies of 13 major trade partners, i.e. Denmark, Estonia, Finland, France, Germany, Italy, Lithuania, the Netherlands, Poland, Russia, Sweden, the UK, and the US. For REER index calculations in Latvia, consumer price indices and producer price indices are used as price and cost indices. Period averages of foreign exchange rate indices are calculated using foreign exchange rates set by the Bank of Latvia. A decline in NEER and REER indices points to improved competitiveness of Latvian exporters in the markets of major trade partners, whereas an increase in them is a sign of deteriorating competitiveness in major trade partners. The NEER index allows assessing the changes in competitiveness depending on exchange rate fluctuations in the market, whereas the REER index additionally includes the comparison of domestic price and cost changes with those of the major trade partners.

The definition of the concept is consistent with the European Central bank’s concepts.

Credits subsequent to the convenience credit card credits, i.e. a debit balance on the card account which has not been settled when it was first possible and for which an interest rate or tiered interest rate, usually higher than 0%, are charged. Often, the holder of a card shall pay minimum monthly instalments to repay the extended credit at least partially.

The definition of the concept is consistent with Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32).

Financial account shows transactions with financial assets and financial liabilities between residents and non-residents. Data of the financial account provides information about the adequacy of financial resources available for financing the transactions recorded in the current account. All entries in the financial account reflect net changes, i.e. a difference between credit and debit entries (inflow of funds is shown with a positive sign (+) indicating either a decrease in assets or an increase in liabilities, whereas outflow of funds is shown with a negative sign (–) indicating either an increase in assets or a decrease in liabilities). The financial account includes five large groups of financial resources: Direct investment, Portfolio investment, Financial derivatives, Other investment and Reserve assets.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Financial accounts is a part of the system of national accounts, comprising outstanding amounts, transactions, revaluation changes due to exchange rate fluctuations, revaluation changes due to price changes and other changes in financial instruments broken down by sector and counterparty sector.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Financial institutions that are primarily engaged in auxiliary financial activities, i.e. activities that are closely related to financial intermediation but are not financial intermediation themselves, e.g. investment brokers who do not engage in financial intermediation services on their own behalf, corporations that provide infrastructure for financial markets, institutions that supervise MFIs, financial corporations and the financial market. The Financial and Capital Market Commission, NASDAQ OMX Riga, the Latvian Central Depository, insurance brokerage companies, currency exchange offices as well as investment management corporations shall be regarded as financial auxiliaries.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Financial options, futures and forwards, interest rate swaps and currency swaps, which create rights and obligations that have the effect of transferring between the parties to the instrument one or more of the financial risks inherent in an underlying primary financial instrument. Financial derivative instruments do not result in a transfer of the underlying primary financial instrument on inception of the contract, nor does such a transfer necessarily take place on maturity of the contract.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Financial instruments comprise means of payment, financial claims and claims which are close to financial claims in nature. Financial instruments are broken down mostly on the basis of their liquidity.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Public institutions engaged in production of non-market goods or provision of services intended for individual or collective consumption, or public institutions engaged in redistribution of national income or wealth. The Central Statistical Bureau of Latvia compiles the list of institutional units of the general government of the Republic of Latvia in accordance with the requirements of the European System of Accounts 1995 (see the list of institutional units of the general government of the Republic of Latvia, section S130000 "Vispārējā valdība (General government)").

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Data under General merchandise are derived from foreign trade statistics provided by the Central Statistical Bureau of Latvia. They include data on trading of goods with the European Union Member States and customs cargo declaration data on trading of goods with countries outside the European Union. In compiling foreign trade statistics in Latvia, a special trade system scheme is used (where goods are imported to and exported from customs warehouses, such imports and exports are excluded from the total). Exports include goods taken out of the country for trading abroad, re-exports, i.e. exports of goods previously imported to Latvia for exporting back to foreign countries, and humanitarian and similar aid. Imports include goods declared for domestic consumption, goods imported to Latvia from customs warehouses, and humanitarian and similar aid. In foreign trade statistics compiled by the Central Statistical Bureau of Latvia, exported goods are stated in FOB (Free on Board) value, while imported goods are stated in CIF (Cost Insurance and Freight) value. In order to ensure consistency with the international standards, which require that exports and imports of goods be presented on a FOB basis in the balance of payments, data for imports of goods are adjusted using the coefficients calculated by the Central Statistical Bureau of Latvia, showing the average relation between FOB and CIF values in 1998 and 1999 (until 2000, imported goods in customs cargo declarations were stated in both FOB and CIF values). The adjustment from CIF to FOB values of goods imports stated in customs cargo declarations is made in the breakdown by resident and non-resident carrier for each mode of transport and each country of goods' origin separately, whereas the respective data on trading of goods adjustments are made separately for each country of consignment. Where the price of goods in a customs cargo declaration is stated in a foreign currency, it is translated into lats, applying the Bank of Latvia's exchange rate for the respective foreign currency as on the day the customs cargo declaration was filled in. Foreign trade statistics also include data on exports and imports of electricity and natural gas. In addition to foreign trade statistics, the following information is used: aggregated data compiled by the Central Statistical Bureau of Latvia on extraterritorial trade by shipping vessels, information on banknote production and coinage costs from the Bank of Latvia's profit and loss statement, and statistics on non-bank external payments compiled by the Bank of Latvia (including data on purchase and sale of sea and air transport vehicles as well as goods bought by residents via catalogues).

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Exports and imports of general merchandise, goods for processing, repairs on goods, goods procured in ports by carriers, and non-monetary gold in a specified period of time.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Goods for processing both in and outside Latvia.

Goods for processing in Latvia include imports of goods for processing and subsequent exports of these goods.

Goods for processing abroad include exports of goods for processing and subsequent imports of these goods.

All transactions are recorded on a gross basis (the value of goods imported or exported for processing and the value of goods exported or imported after processing (raw material and processing services costs)).

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Goods procured in ports by carriers covers goods procured by non-resident carriers for own consumption in Latvia (exports) and resident carriers abroad (imports).

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Natural persons or groups of natural persons in the capacity of consumers and producers of goods and providers of non-financial services exclusively for their own final consumption. In the Republic of Latvia, households are also sole proprietors who have not registered their activity with the Commercial Register of the Enterprise Register of the Republic of Latvia.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Financial institutions that are engaged in financial intermediation as a consequence of risk pooling. Insurance corporations take on a potential risk of loss of the insurance taker or the insured, or transfer a potential risk of financial loss to the re-insurer. Insurance corporations provide life or non-life insurance services. Private pension funds insure social risk of their members by accruing and investing voluntary contributions made by members themselves or for their benefit to provide such members with extra old age or disability pension capital. This sector comprises insurers, re-insurers, private pension funds, state-funded pension scheme assets and state guarantee funds.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

International investment position is a statistical statement reflecting the value and composition of Latvia's financial claims (Assets) on and financial obligations (Liabilities) to the rest of the world, respectively, at a specified date, as well as reasons for changes in the residual values in the respective time period. Changes in the residual values may occur as a result of net flows (balance of payments data), exchange rate changes, price changes, and other adjustments (mainly due to various reclassifications in the system of information provider, debt capitalisation, etc). Investment under international investment position is classified into assets and liabilities. Both assets and liabilities include direct investment, portfolio investment, financial derivatives, and other investment, with reserve assets also included under Assets.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Residents' income from holdings of foreign financial assets and payments on foreign financial liabilities. The increase or decrease in the value of capital arising from holdings of financial assets or financial liabilities is not regarded as investment income but is a part of assets or liabilities recorded in the international investment position as price changes. Investment income consists of income from direct investment, portfolio investment and other investment. Direct investment income consists of income on equity (dividends and reinvested earnings) and income on debt (interest).

Dividends are payments from the profit made by the issuer of equity securities to holders of securities.

Reinvested earnings are such part of company's profit or loss that is available to the direct investor in proportion to investor's holding in the enterprise and remains at the disposal of the direct investment enterprise. In the case of foreign direct investment in Latvia, reinvested profit or loss is reported in the balance of payments as follows:

– The share of profit of a direct investment company, due to the direct investor, is reported both as an outflow of income from direct investment on the current account item BOPSY 3 333 (payment of earnings to the direct investor) and an inflow of foreign direct investment into the financial account item BOPSY 4 575 (reinvested earnings). Where dividends are paid, it is reported as an outflow of income from direct investment on the current account item BOPSY 3 332, at the same time reducing reinvested earnings on the current account item BOPSY 3 333 and financial account item BOPSY 4 575 by the amount of the dividends paid.

– The share of loss of a direct investment company, attributable to the direct investor, is at the same time reported as an inflow of income from direct investment on the current account item BOPSY 3 333 (the direct investor's payment for covering losses) and an outflow of foreign direct investment from the financial account item BOPSY 4 575 (as a rule, foreign investors offset this outflow by additional capital injection into equity capital, reported under the financial account item BOPSY 4 560, or in the form of other capital, reported under the financial account item BOPSY 4 580). Where dividends are paid, they are reported as an outflow of income from direct investment on the current account item BOPSY 3 332, at the same time increasing reinvested loss on the current account item BOPSY 3 333 and financial account item BOPSY 4 575 by the amount of the dividends paid.

Income on debt is interest payable to holders of debt securities or similar financial assets (loans, trade credits and deposits).

The time of recording the direct investment income depends on the type of income. Dividends are recorded at the time of their calculation, i.e. as of the date on which they become payable to investors. Reinvested earnings are recorded in the period in which they are earned. Income on debt (interest) is recorded on an accrual basis.

Similar to direct investment income, portfolio investment income is recorded in the balance of payments in the breakdown by investment instrument: income on equity (dividends) and income on debt securities (bonds and notes, and money market instruments).

Other investment income is income on investment other than direct investment and portfolio investment.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

External debt (gross) present debt-related liabilities of Latvia to other countries. It is disseminated in the breakdown by sector (general government, central bank, MFIs (excl. central bank) and other sectors), investment instrument and maturity. External assets reflect the corresponding items of Latvia's net financial claims (Monetary gold and Special Drawing Rights are not included). The net external debt position is equal to gross external debt less external assets in debt instruments.

The definition of the concept is consistent with Balance of Payments Manual 5th edition and External Debt Statistics: Guide for Compilers and Users.

Claims resulting from transactions with non-MFIs, including loans, overdrafts, revolving loans, convenience credit card credit and extended credit card credit, claims resulting from financial leasing and reverse repo transactions, margins to be repaid under a contractual agreement, and non-negotiable debt securities issued by non-MFIs.

The definition of the concept is consistent with Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32).

Remunerated transactions in which a lender, on the basis of a written contract, transfers money to a borrower in ownership and which imposes a duty on the borrower to return the money to the lender within a specified time and following a specified procedure.

Short-term loans are loans with an initial maturity of up to one year (inclusive).

Long-term loans are loans with an initial maturity of over one year.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Loans granted to households and non-profit institutions serving households for purchase of a house, a flat or a plot of land, for building or refurbishment. Loans for house purchase comprise those mortgage loans and loans for renovation of a house (a flat) that add value to the economic features of the house (flat).

The definition of the concept is consistent with Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32).

Public institutions, whose competence covers only a local economic territory. The Central Statistical Bureau of Latvia compiles the list of institutional units of the general government of the Republic of Latvia in accordance with the requirements of the European System of Accounts 1995.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Monetary base: a monetary aggregate that is calculated on the basis of the Bank of Latvia's methodology and comprises the lats banknotes and coins issued by the Bank of Latvia and demand deposits of resident MFIs and financial institutions (overnight deposits) with the Bank of Latvia.

The definition of the concept is consistent with the methodology of the Bank of Latvia (briefly described in the Bank of Latvia's Annual Report).

A narrow monetary aggregate that is calculated on the basis of the methodology of the European Central Bank and comprises the lats banknotes and coins issued by the Bank of Latvia (less vault cash of MFIs) and overnight deposits in lats and foreign currencies held with MFIs by resident financial institutions, non-financial corporations, households and non-profit institutions serving households and local governments.

The definition of the concept is consistent with the methodology of the European Central Bank.

An intermediate monetary aggregate that is calculated on the basis of the methodology of the European Central Bank and comprises M1 and deposits redeemable at a period of notice of up to and including three months (i.e. short-term savings deposits) and deposits with an agreed maturity of up to and including two years (i.e. short-term time deposits) in lats and foreign currencies held with MFIs by resident financial institutions, non-financial corporations, households and non-profit institutions serving households and local governments.

The definition of the concept is consistent with the methodology of the European Central Bank.

Broad money: a monetary aggregate that is calculated on the basis of the Bank of Latvia's methodology and comprises the lats banknotes and coins issued by the Bank of Latvia (less vault cash of MFIs) and overnight deposits and time deposits in lats and foreign currencies (including deposits redeemable at notice and repurchase agreements) held with MFIs by resident financial institutions, non-financial corporations, households and non-profit institutions serving households. M2X incorporates deposits made by local governments as a net item on the demand side.

The definition of the concept is consistent with the methodology of the Bank of Latvia (briefly described in the Bank of Latvia's Annual Report).

A broad monetary aggregate that is calculated on the basis of the methodology of the European Central Bank and comprises M2, repurchase agreements, debt securities with a maturity of up to and including two years issued by MFIs and money market fund shares and units.

The definition of the concept is consistent with the methodology of the European Central Bank.

Credit institutions, credit unions, e-money institutions, money market funds and other financial corporations whose business is to receive deposits or close substitutes for deposits from non-MFIs and, on their own account, to grant credits and invest in securities; also the national central bank.

The definition of the concept is consistent with the Bank of Latvia's Council Regulation No 40 of 16 July 2009 "Regulation for compiling the monthly financial position report of monetary financial institutions" and Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32).

A component of foreign reserves assets held by central bank or central government and who are subject to the effective control of those institutions.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Equities certifying participation of an investor in an investment fund (incl. in a money market fund) and the rights arising from such participation.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Households net equity of the technical provisions of insurance corporations for life insurance against outstanding risks.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Households net equity of the second and third pillar of pension funds (i.e. households net equity of state-funded pension scheme assets and private pension funds).

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

As the balance of payments' accounts are prepared using various data sources compiled not only by the Bank of Latvia but also other institutions, discrepancies in entries, known as errors and omissions, may occur. Over a longer horizon, with the deviation being positive at one time and negative at another, errors and omission should level out; yet it is important for either tendency not to persist too long.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

The difference between total outstanding amount of financial instrument assets and total outstanding amount of financial instrument liabilities. If the net financial assets of a sector are positive, its financial assets exceed liabilities; if negative, liabilities exceed assets. If the net financial assets of residents are positive, external claims exceed external liabilities and non-residents have a debt to the country. Negative net financial assets of residents indicate the debt of the country to non-residents.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

The difference between total transactions in financial instrument assets and total transactions in financial instrument liabilities. If a sector net lends (+), it has financed the operations of other sectors; if net borrows (–), it has received funds from other sectors. The net lending (+) or net borrowing (–) of residents shows whether the country as a whole has involved external funds or allocated them abroad.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Economic entities producing goods or providing non-financial services with the aim of gaining profit or other proceeds. In the Republic of Latvia, individual merchants registered with the Commercial Register of the Enterprise Register of the Republic of Latvia are also regarded as non-financial corporations. Non-financial corporations may be both public and private. Public non-financial corporations are non-financial corporations where the government owns more than 50% of the capital or voting rights, or where it exercises direct or indirect control.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Institutional units other than MFIs (general government, other financial intermediaries, financial auxiliaries, insurance corporations and pension funds, non-financial corporations, households and non-profit institutions serving households).

The definition of the concept is consistent with the Bank of Latvia's Council Regulation No 40 of 16 July 2009 "Regulation for compiling the monthly financial position report of monetary financial institutions" and Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32).

Gold not included in reserve assets.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Non-profit institutions that provide goods and services to natural persons or groups of natural persons and that derive resources mainly from voluntary contributions in cash or kind from payments made by general governments and from property income. Such institutions are, for instance, trade unions, professional or educational associations, consumer associations, political parties, churches, religious communities, as well as culture, recreation and sports clubs, charity, support and aid organisations.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

All institutions registered abroad, and private persons whose households are located outside Latvia or who are staying in Latvia for a period of time less than one year (excl. students). Branches of MFIs registered abroad as well as foreign diplomatic and consular representative offices, those of international institutions and other official representative offices in Latvia shall also be considered non-residents.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Financial claims (or liabilities) created as a counterpart of a financial or a non-financial transaction in cases where there is a timing difference between this transaction and the corresponding payment.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Financial corporations other than insurance corporations and pension funds that are primarily engaged in financial intermediation by incurring liabilities in forms other than currency, deposits and close substitutes for deposits from non-MFIs, or insurance technical reserves. Other financial institutions are corporations engaged in lending (e.g. financial leasing companies, factoring companies, export/import financing companies), investment funds, investment brokerage companies, financial vehicle corporations, financial holding corporations, venture capital corporations as well as other financial institutions provided that their activity complies with the given definition.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Financial transactions that are not included under Direct investment, Portfolio investment, Financial derivatives and Reserve assets. Other investment is broken down by investment type (trade credits, loans, currency and deposits, other assets, and other liabilities) and institutional sector (central bank, general government, MFIs (excl. central bank), and other sectors).

Trade credits are transactions where the supplier of goods or provider of services procures goods or renders services in advance (direct extension of credit) or where the buyer of goods or services makes an advance payment (prepayment).

Loans are transactions, where the creditor, upon an agreement with the debtor, transfers financial assets to the debtor; if the creditor receives a document confirming the debt, it cannot be sold or transferred to a third party.

Currency and deposits covers an increase or decrease in deposits made by residents with non-resident (foreign) credit institutions, changes in foreign currency in vault, and an increase or decrease in non-residents' deposits with Latvia's MFIs (excl. central bank) and with the central bank.

Other assets and Other liabilities include any other transactions that cannot be classified as trade credits, loans, and currency and deposits, including Latvia's payments to the capital of international organisations.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Loans granted for a purpose other than consumption or house purchase, e.g. loans for business activities, education.

The definition of the concept is consistent with Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32).

The services that are not Transportation and Travel, i.e. communication services, construction, insurance, financial services, computer and information services, royalties and license fees, other business services, personal, cultural and recreational services, and government services not included elsewhere.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Investment (net transactions and positions) made by residents of Latvia in securities issued by residents of other countries (Assets) and by residents of other countries in securities issued by residents of Latvia (Liabilities). Portfolio investment is made with the purpose of increasing the investment value or earning dividends or interest, without directly influencing the management of the company. Portfolio investment includes the short-term and long-term financial instruments. Financial instruments included under portfolio investment are freely tradable. In the balance of payments, portfolio investment is classified into Equity securities and Debt securities (bonds and notes, money market instruments).

Portfolio investment in equity securities (new share issues and shares traded in the secondary market) covers acquisition and disposal of shares (units) if they represent a holding of less than 10% of a non-resident's ownership in the capital of a resident's enterprise or of a resident's holding in the capital of a non-resident's enterprise. A holding of less than 10% in the capital of a direct investor's enterprise (recorded under direct investment) shall be an exception. To record the data on portfolio investment in equity securities in Latvia (liabilities) at the market value to the extent possible, information on listed enterprises provided by the NASDAQ OMX Riga is used, whereas data for unlisted enterprises are derived by applying the equity capital approach (own funds at book value) recommended by the European Central Bank.

Portfolio investment in bonds and notes includes transactions where non-residents other than direct investors or direct investment enterprises acquire and dispose of their holdings of debt securities with original maturity of over one year. The redemption of such debt securities is also reflected under portfolio investment. Money market instruments have original maturity of up to one year (inclusive). Each category of portfolio investment is recorded in the breakdown by institutional sector (central bank, general government, MFIs (excl. central bank) and other sectors).

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Prepayments of insurance premiums and technical provisions established by insurance corporations for non-life insurance as well as the net assets of state guarantee funds.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Shares placed on regulated markets.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Credit entries under Repairs on goods cover the value of resident-performed repairs on ships, aircraft and other fixed assets owned by non-residents that increases assets' book value, while debit entries include the value of non-resident-performed repairs on ships, aircraft and other fixed assets owned by residents that increases assets' book value.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Agreements on selling securities at a specified price on condition that the same or similar securities are repurchased for the specified price at maturity of the transaction.

The definition of the concept is consistent with Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32).

In the balance of payments, reserve assets are made up of monetary gold, Special Drawing Rights (SDR), reserve position in the International Monetary Fund, foreign exchange (currency, deposits and securities), and other claims. Financial assets that are at the disposal of the central bank and cannot be classified as reserve assets are recorded under Portfolio investment or Other investment.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

All institutions, including foreign ones, registered and operating in the Republic of Latvia, and private persons whose households are located in Latvia and who do not leave Latvia for a period of time of over one year (excl. students). Latvian diplomatic, consular and other representative offices abroad shall also be regarded as residents. Institutions located in offshore financial centres are treated as residents of the territories in which the centres are located.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.

Agreements on buying securities at a specified price on condition that the same or similar securities are resold for the specified price at maturity of the transaction.

The definition of the concept is consistent with Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32).

Loans which have the following features: the borrower may use or withdraw funds from the account up to the pre-approved credit limit without giving prior notice to the MFI; the amount of the available credit may increase or decrease as funds are borrowed or repaid; credit may be used recurrently; there is no obligation to repay the borrowed funds on a regular basis.

The definition of the concept is consistent with Regulation (EC) No 25/2009 of the European Central Bank of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector (Recast) (ECB/2008/32).

All transportation services rendered by residents of a country to non-residents and includes passenger traffic, freight traffic, rentals of transport vehicles (with crew), and other supporting and auxiliary services. In the balance of payments, transportation services are recorded under Sea transport, Air transport, Rail transport and Road transport.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

All goods and services purchased by non-resident travellers in Latvia and all purchases (expense) made by resident travellers outside Latvia. International carriage of travellers is not recorded under Travel. A traveller is a person arriving on a private or business trip in a non-residence country and staying in it for less than one year. Students, trainees and patients of medical establishments shall be an exception – they shall be classified as travellers regardless of the duration of their stay in another country.

The definition of the concept is consistent with Balance of Payments Manual 5th edition.

Shares that are not placed on regulated markets and securities equivalent to shares representing ownership of a stake in the capital of a capital company, other than quoted shares and mutual fund shares. In Financial accounts other equity also include the capital of central bank and the investments of general government to the capital of international organisations, with the exception of the International Monetary Fund.

The definition of the concept is consistent with Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community.