JNANASAHYADRI SHANKARAGHATTA

INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH

PRESENTATION ON
“BALANCE OF PAYMENT”
PRESENTED BY
KHASIM
SACHIN SG
SWATHI KR
SNEHA
MEGHA
RANJITHA
ARPITHA
CONTENTS :
 INTRODUCTION
 MEANING & DEFINITION

 ADVANTAGES & DISADVANTAGES

 COMPONENTS OF BOP

 BALANCING BALANCE OF PAYMENTS

 BALANCE OF PAYMENT POSITIONS

 FACTORS CAUSING DISEQUILIBRIUM IN BOP

 MEASURES FOR CORRECTING UNFAVOURABLE BOP

 SIGNIFICANCE OF BOP

 CONCLUSION
INTRODUCTION :
 Balance of payment (BOP)are an accounting record
of all monetary between a country and the rest of
the world. these transactions include payments for
the country’s export and imports of goods &
services , financial capital , and financial transfers.
 A country has to deal with other countries in

respect of 3 items :
I. VISIBLE ITEMS
II. INVISIBLE ITEMS
III. CAPITAL TRANSFERS
MEANING :
 A Balance of payment is a systematic record of all
economic transactions between residents of a country
and the rest of the world carried out in a specific
period of time.

DEFINITION :
 The IMF defined Balance of payments as a systematic
record for all economic transactions during a certain
period of time between residents of the reporting
countries.
ADVANTAGES :
 Great value in forecasting & evaluating its business
 Basis to evaluate a country’s solvency
 Direction of a country’s international trade
 It clarifies the foreign exchange position of a
country
 It decide the trade , industrial and economic
policies of the government
DISADVANTAGES :
 Costly method

 Time consuming
COMPONENTS OF BALANCE OF
PAYMENT :

1.CURRENT ACCOUNT

2.CAPITAL ACCOUNT
BALANCING BALANCE OF PAYMENTS
 Balance of payments become from the
following three types of Balances

1. Balance of trade
2. Balance of payments – current
account
3. Balance of payments – capital
account
BALANCE OF PAYMENT POSITIONS :

The balance of payment position of a

country may be :

1. Favourable (surplus)
2. Unfavourable (deficit)
3. Equilibrium
4. Disequilibrium
FACTORS CAUSING DISEQUILIBRIUM IN BOP

 Factors can be grouped into three:

1.Economic factors

2.Political factors

3.Sociological factors
1. Economic Factors :
Economic factors causing disequilibrium in the
BOP are three
A. Development Disequilibrium
B. Cyclical Disequilibrium
C. Structural Disequilibrium

2. Political Factors :

3. Sociological Factors :
MEASURES FOR CORRECTING UNFAVOURABLE
BOP :
 The available measures for correcting
unfavourable balance of payments can
be grouped into two:
1.Automatic Measures
2.Deliberate Measures

1.Automatic Measures (Gold standard

now paper currency standard)
2. Deliberate Measures
These measures refers to the correction of
unbalance by measures taken deliberately .
these measures are classified into two groups

A. Monetary Measures
B. Trade Measures
A. Monetary Measures
 Monetary measures consist of
 Monetary contraction
 Devaluation of Domestic Currency
 Exchange Control

B. Trade Measures
 The trade measures include
 Export Promotion
 Import Control (Quotas & Tariffs)
SIGNIFICANCE OF BALANCE OF PAYMENT
 The balance of payments data on a country
can be used to evaluate the performance of
the country in international economic
competition.
 The balance of payments data in a country

may signal or reveal its potential as a

business partner for the rest of the world.
 The balance of payments of a country

provides detailed information concerning

the demand and supply of the country’s
currency.
Conclusion
THANK YOU