1. Balance of Payments, Current Account and Capital Account
Lecture 9 Don DeVoretz
Balance of Payments, Current Account
and Capital Account

2. Current Account: Current Account = (A-B+C-D+E) < or > than 0
1. Exports of goods and Services = A
2. Imports of G and S = B
3. Investment Income = C
4. Debt Service = D
5. Remittances = E
Current Account = (A-B+C-D+E) < or > than 0

3. Capital Account Capital Account= (G+H-I-K)
6. Direct Private Investment =G
7. Foreign Loans = H
8. Foreign Assets Domestic Banks = I
9. Capital Outflow =K
Capital Account= (G+H-I-K)

4. Equilibrium: Balance of Payments
+/- Cash Reserves =
Current Plus
Capital Account
What if no CASH Reserves in hard currency ?
BORROW

5. From Whom ? IMF Private Banks: BNS Bilateral Gov’t Loans Multilateral
Japan,USA and EU
Multilateral
Inter-American Bank
IMF

6. End of Show