BALANCE OF PAYMENT

Balance of Payments

A systematic record of all economic transactions between the residents of a reporting country and residents of foreign countries during a given period of time.

Economic Transactions

Transactions that involve the transfer of title or ownership of goods, services, money, and assets.

Visible Items

Physical goods that are exported and imported, which can be seen, touched, and measured.

Invisible Items

Services such as shipping, banking, and insurance that cannot be seen, felt, touched, or measured.

Unilateral Transfers

One-way transactions that include gifts and personal remittances, without a claim for repayment.

Capital Transfers

Financial transactions related to capital receipts and payments, such as borrowings or sale of assets.

Current Account

Records all transactions relating to the export and import of goods and services as well as unilateral transfers.

Balance of Trade (BOT)

The difference between the value of a country's exports and imports of goods.

Surplus in Current Account

Occurs when credit items are higher than debit items, indicating a net inflow of foreign exchange.

Deficit in Current Account

Occurs when debit items exceed credit items, indicating a net outflow of foreign exchange.

Double Entry System

An accounting method where each transaction is recorded in two accounts to maintain balance.

Autonomous Items

International economic transactions that occur for economic motives like profit maximization.

Accommodating Items

Transactions undertaken to cover deficits or surpluses in autonomous transactions.

Balance on Capital Account

The net value of credit and debit balances from transactions that change the assets or liabilities of a country.

Credit Side in BOP

All inflows or sources of foreign exchange are recorded here.

Debit Side in BOP

All outflows or uses of foreign exchange are recorded here.