Definition: Processing of goods

Category: External debt - IMF

In BPM5, when goods are exported across a border for processing with the intention that the processed goods are returned to the exporting economy, a goods transaction should be recorded in the balance of payments—an import of the processing economy from the original economy. In such circumstances, a corresponding financial liability is established and recorded as external debt under trade credit. When the processed good is returned, the financial liability is extinguished. If the amounts are significant, it is recommended that such trade credit be separately identified (as is recommended in the trade account of the balance of payments). http://ec.europa.eu/eurostat/ramon/statmanuals/files/external_debt_guide_2003_EN.pdf#page=227