Definition: Other general government

Category: Balance of Payments, IMF

Among other capital transfers of general government, investment grants are significant. Investment grants consist of capital transfers, in cash or in kind, made by governments to non-residents units, or vice versa, to finance all or part of the costs of acquiring fixed assets. The recipients are obliged to use investment grants in cash for purposes of gross fixed capital formation, such as large construction projects. Investment grants in kind consist of transfers of transport equipment, machinery, other equipment, and the direct provision of buildings or other structures by governments to non-resident units. Also included under government capital transfers are taxes on capital transfers, that is, taxes levied, at irregular and infrequent intervals, on the values of assets transferred to non-residents. These consist largely of inheritance taxes, death duties, and gift taxes. Compensation payments by government to non-residents for extensive damages to capital assets or serious injuries not covered by insurance policies represent another form of capital transfers. These include payments for damages caused by oil spills, major explosions, the side effects of drugs, etc.)
International Monetary Fund (IMF), "Balance of Payments Manual" (BOP), Fifth Edition, Washington D.C., 1993