BOP.pdf - Presentation on Balance Of Payment (BOP)...

Presentation
on
Balance Of Payment
(BOP)

Introduction

Balance of payments (BOP) accounts are an accounting record of all
monetary transactions between a country and the rest of the world.
These transactions include payments for the country's exports and
imports of goods & services , financial capital , and financial transfers .

A country has to deal with other countries in respect of 3 items:-

Visible items which include all types of physical goods exported and
imported.

Invisible items which include all those services whose export and
import are not visible. e.g. transport services, medical services etc.

Capital transfers which are concerned with capital receipts and
capital payment.

Definition-

According to Kindle Berger , "The balance of payments of a
country is a systematic record of all economic transactions
between the residents of the reporting country and residents
of foreign countries during a given period of time".

Features

It is a systematic record of all economic transactions
between one country and the rest of the world.

It includes all transactions, visible as well as invisible.

It relates to a period of time. Generally, it is an annual
statement.

It adopts a double-entry book-keeping system. It has two
sides: credit side and debit side. Receipts are recorded on
the credit side and payments on the debit side.

Components of BOP
1.
Current Account Balance

BOP on current account is a statement of actual receipts
and payments in short period.

It includes the value of export and imports of both visible
and invisible goods. There can be either surplus or deficit
in current account.

The current account includes:- export & import of
services, interests, profits, dividends and unilateral
receipts/payments from/to abroad.

2.