Balance of Payments Contents

Introduction

Components of balance of Payments

Foreign Trade

Import and Export of goods and services

Balance of Payments Introduction

Payments are made in exchange of Imports

Payments are received in exchange of Exports.

IMPORTER

EXPORTER

Balance of Payments Introduction

BALANCE OF PAYMENT ACCOUNT

Payments (Debits) ` Receipts (Credits) `

Import of goods Export of goods

Import of services Export of services

Unilateral transfers (Payments)

Unilateral transfers (Receipts)

Capital Payments Capital Receipts

TOTAL TOTAL

Payments are debited

Receipts are debited

Balance of Payment - Definition

Balance of Payments Introduction

BALANCE OF PAYMENT ACCOUNT

Payments (Debits) ` Receipts (Credits) `

Import of goods Export of goods

Import of services Export of services

Unilateral transfers (Payments)

Unilateral transfers (Receipts)

Capital Payments Capital Receipts

TOTAL TOTAL

Payments are debited

Receipts are credited

Balance of Payment - Definition

Balance of Payments (BOP) refers to the statements of accounts recording economic transactions of a country with rest of the world.

Balance of Payments Introduction

Capital Account

Components of Balance of Payments

Current Account

Balance of Payments Components of Balance of

Payments

Capital Account

Components of Balance of Payments

Current Account

Balance of Payments Components of Balance of

Payments

Financial investment flows

E.g. Inflows of money from overseas into government bonds, property.

$

Components Capital Account

Banking capital transactions of external financial assets and liabilities.

E.g. NRI Deposits.

Components Capital Account