BALANCE OF PAYMENTS. Definition an accounting record of transactions concluded between all domestic and foreign entities (individuals, businesses, government.

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Presentation transcript:

BALANCE OF PAYMENTS

Definition an accounting record of transactions concluded between all domestic and foreign entities (individuals, businesses, government agencies) over a defined period of time compares the amount of foreign currency taken in to the amount of domestic currency paid out HOMEFOREIGN

Structure of BoP Current Account Capital Account Reserves Errors and Ommitments + + +

Structure of BoP (cont.) Current Account Exports - HOME FOREIGN Imports +

Structure of BoP (cont.) Current Account Exports HOME FOREIGN Imports Income Income of nationals gained in Foreign (+) and income of foreigners gained in Home (-): - salary, pension - interests - dividends

Structure of BoP (cont.) Current Account Exports HOME FOREIGN Imports Income C.A. balance Capital Account Foreign Direct Investments Those of Home-based businesses in Foreign (-) and those of Foreign-based businesses in Home (+): - purchase of shares (>25%) - business set-up - take-overs +-

Structure of BoP (cont.) Current Account Exports HOME FOREIGN Imports Income C.A. balance Capital Account Foreign Direct Investments +- Those of Home-based businesses in Foreign (-) and those of Foreign-based businesses in Home (+): - equities - bonds - other securities Portfolio Investments +-

Structure of BoP (cont.) Current Account Exports HOME FOREIGN Imports Income C.A. balance Capital Account Foreign Direct Investments +- Portfolio Investments +- Those of Home-based businesses in Foreign (+ or -) and those of Foreign-based businesses in Home (+ or -): - bank deposits (net change) - credits and loans Other Investments

Including change of Reserve Assets and Errors Structure of BoP (cont.) Current Account Exports HOME FOREIGN Imports Income Current A. balance Capital Account Foreign Direct Investments +- Portfolio Investments +- Other Investments Capital A. balance Balance of Payments