Qatar Economic Outlook Issue Number 13

Appendix: Economic and Financial Terms 
 
123 
communications, construction, housing 
rentals, and financial services. 
What is the current account balance? 
This is the sum of the trade, income and 
services balances, together with net current 
transfers, which include cash transfers, gifts 
in kind, and remittances (which are sizeable 
in Qatar) sent by foreign workers to families 
back home. It is termed the current account 
because goods and services are generally 
consumed in the current period. 
How is merchandize trade balance 
calculated? 
Due to the different methods of collecting 
merchandise import data and the extent of 
their coverage by the General Customs 
Authority and the Qatar Central Bank, there 
exists about a 6% difference between the 
value of imports published in balance of 
payments reports and the value of imports 
published in foreign trade reports issued by 
the Planning and Statistics Authority. The 
difference in data is due to a number of 
reasons, the most the most important of 
which are: 
The value of merchandise imports recorded 
by the General Customs Authority includes 
costs, insurance, and freight (CIF-cost of 
freight insurance), while the value of 
merchandise imports, according to the scale 
of payments, is the value on board (FOB - 
free on board) in the exporting country. 
There are also data on some import 
transactions carried out by banks, which do 
not necessarily pass through customs 
outlets. 
The General Customs Authority also does 
not record data on the activities of Qatar 
Airways that are classified as exports and 
imports, such as: sales of on-board food and 
drinks, and especially fuel, including fuel 
sales to international airlines. Further, there 
is no monitoring of fuel sales to ships and 
tankers. 
What is the capital and financial account 
balance? 
This balance records purchases or sales of 
financial assets or transactions related to 
international borrowing and lending. It also 
includes capital transfers. 
Components of financial accounting: 
It is understood that the components of 
financial accounts consist of foreign direct 
investment, portfolio investment, and other 
foreign 
investment. 
Foreign 
direct 
investments are those shares in foreign and 
national companies in which foreigners own 
more than 10% while also having an 
influence in their management. On the other 
hand, portfolio investments are those 
investments that are made either by trading 
in shares of national or foreign companies 
that amount to less than 10% of the 
companies’ value or through stock exchange 
transactions, issuance, and purchase of 
sovereign and private bonds. As for other 
foreign investments, they often consist of 
commercial credit facilities, investment loans 
that are either short or long-term, as well as 
currency deposits in investment accounts in 
commercial banks. 
What is an international investment position? 
The international investment position of a 
country is a financial statement presenting 
both the composition and value of a country’s 
external financial assets and liabilities. The 
difference between these assets and 
liabilities is the country’s net international 
investment position. 
What is external debt? 

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