1. SNA ADVISORY EXPERT GROUP (Bangkok, July 2005)
Non-resident SPEs linked to General Government
TFHPSA
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2. Non-resident SPEs linked to General Government
Government may create SPEs abroad for specific activities like:
Privatisation
Defeasance
Securitisation of assets
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3. Non-resident SPEs linked to General Government
Issue: classification of the SPE as resident (on the economic territory) or non-resident
In principle, in the SNA1993, the concept and coverage of residence is identical to those in the BOP manual of IMF
Questions: Is the SPE an institutional unit? Where is its « centre of economic interest »?
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4. Non-resident SPEs linked to General Government
Reminder of SNA 1993:
§14.7: « the concept of residence is not based on nationality or legal criteria. » Primacy of the « centre of economic interest », over « a long period of time » (§14.12)
General government (§14.30) has agencies abroad (embassies), considered extraterritorial in the economy in which they are physically located.
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5. Non-resident SPEs linked to General Government
TFHPSA recommendation for the SNA update:
To classify these SPEs created by government for its financial convenience inside the general government sector (S.13), and not as corporations (financial or non-financial)
BOP Committee has a different view
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6. Non-resident SPEs linked to General Government
TFHPSA rationale:
This type of units acts under the direct control, financing and management of the general government, and usually for a limited period of time
They cannot be financial intermediaries (« they do not put themselves at risk », SNA, §4.78)
They would rather be considered ancillary units or treated like embassies.
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7. Way forward
More research to be conducted in the case of SPEs created by general government.
The TFHPSA will explore alternatives for the treatment of government SPEs and/or their transactions.
The TFHPSA will circulate proposals to an informal working group including BOP representatives during the Summer 2005.
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