Balance of Payments
Balance of Payments
Balance of Payments
Meaning
The BOP of a country can be defined as a systematic
statement of all transactions of a country with the
rest of the world during a period of time, usually one
year.
The purpose of BOP accounting is to take the stock
of countrys foreign receipts & payment obligations
and of assets & liabilities arising out of international
economic transactions with a view to correcting
unhealthy trends
BOP Accounts
1. Current transactions
2. Capital transaction
Current Transaction
Capital Transactions
Corrective measures
Expenditure switching policy
- devaluation
- import tariff
- import restriction
- impose quota on import
Expenditure reducing policy
- increase in taxes
- increase in interest rates
- reduce subsidies