Balance of payment

Content:
►Meaning
►Characteristics
►Balance of payments accounts
►Balance Of Payments & Balance Of
Trade
►Causes of disequilibrium in BOPs
►Method of correcting disequilibrium
 Meaning

BOP is the systematic record of all economic

transactions done by nation with the rest of
the world. During a year period of time.
 Characteristics
► BOPs is the systematic record of all
economic transactions with the rest of the
world.
► BOPs related to period of time.
► BOPs includes the BOTs in it.
► It includes all transactions current as well as
capital.
 Cont….
► It includes the receipts & payments of the
country.
► It is just like a balance sheet.
► It is based on double entry book keeping
system.
► It is not balanced generally it contains some
induced transactions for make it balanced &
these transactions done deliberately.
Balance of payments Accounts

1. Current a/c.
2. Capital a/c.
3. Official reserve a/c.
Balance of trade & balance of
payments
Causes of Disequilibrium in BOPs
► Natural factors
► Economic factors
 Recession in foreign countries.
 Inflation
 Change in exchange rate
Method of correcting Disequilibrium

► Monetory policy
► Reduction in Imports
► Increase in Exports
► Devaluation of currency
Thank you