Q.29. Write a detailed note on Balance of
Payments.
BALANCE OF
PAYMENTS
Each nation periodically publishes a
set of statistics that summarize for a given period all economic transactions
between its residents and the outside world. This statistical statement is
referred to as balance of payments. The accounts show how a nation has financed
its internation activities during the reporting period. They also show that
what changes have taken place in the nations financial claims and obligations
with the rest of the world.
STANDARD PRESENTATION
The IMF has significantly worked with
success to standardize the system and the form of presentation.
B.O.P –
DOUBLE ENTRY ACCOUNT
The B.O.P used double entry accounting.
Transactions are recorded as credits of the yield receipts from or claims
against foreign owners. Credits are received for example by exports of
merchandise, sale of securities overseas and rendering services to foreigners.
Similarly, debits are recorded of transactions cause payments to foreigners
e.g. importing goods, tourist expenses abroad, purchase of foreign bonds.
B.O.P –
CURRENT ACCOUNT
The Current Account includes
merchandise trade in good and International Services are termed as Invisible
trade. There are four basic service components. Tourism, Investment, Private
Sector, Services such as royalties, rent, consulting and engineering fees etc
and Government services such as diplomatic and buildings and membership fees in
international organizations.
B.O.P –
CAPITAL ACCOUNT
The capital account has a long term
and a short term sector. The long term amount shows the inflow and outflow of
capital commitments which have a maturity longer than a year. Short term
capital movement frequently have a maturity date from 30-90 days. Long term
capital items generally include loans to and from other governments, financial
support for development. Projects abroad and export financing. Short term
capital include paying for international services, selling accounts etc.
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