Balance of Payments (BOP)

Set of accounts that record a country’s international transactions, and which always balance out with no surplus or deficit shown on the overall basis.

A surplus or deficit can be shown in any of its three component account :

1. Current Account, covers export and import of goods and services,

 

2. Capital Account, covers investment inflows and outflows, and

 

3. Gold Account, covers Gold Inflow and Outflow.

 

BOP accounting serves to highlight a country’s competitive strength and weaknesses, and helps in achieving balanced economic growth.

Advertisements