the large projected increase in the debt-to-GDP ratio exceeds the impact of the deterioration in the general government’s net borrowing position, indicating insufficient efforts to control factors other than net borrowing, which contribute to the change in debt levels.

In its consolidated financial statements Parent can designate the US$300 million external borrowing in Subsidiary A as a hedge of the EUR/USD spot foreign exchange risk associated with its net investment in the US$300 million net assets of Subsidiary C. In this case, both the EUR/USD foreign exchange difference on the US$300 million external borrowing in Subsidiary A and the EUR/USD foreign exchange difference on the US$300 million net investment in Subsidiary C are included in the foreign currency translation reserve in Parent’s consolidated financial statements after the application of hedge accounting.

Transactions in loans (liabilities) [2A.20] is equal to new loans (F.4) borrowed, net of repayments of existing loans, recorded among changes in liabilities and net worth of S.13 and changes in assets of all sectors except S.13.

Net lending (+) / net borrowing (–) (from financial account)

Net lending (+) / net borrowing (–) (balance current capital account)

Large stock-flows adjustments indicate that more attention needs to be paid to factors, other than net borrowing, which contribute to increase debt levels.