3. A balance of payments is a double entry
system of record of all economic
transactions between the residents of a
country and the rest of the world carried
out in a specific period of time.
The balance of payments takes into account
the export and import of both the visible
and invisible items.
4. BALANCE OF PAYMENTS STATEMENT PRESENT A CLASSIFIED
RECORD OF:
All receipts on account of goods exported
Services rendered
Capital received by residents
Payments made by the residents due to
goods imported and services received from
Capital transferred to non –residents
/foreigners
5. COMPONENTS OF BALANCE OF PAYMENTS
Current account
Capital account
Unilateral payments account
Official settlement account
6. CURRENT ACCOUNT
The current account includes visible exports and
imports and invisible items like receipts and
payments for various services like banking,
transportation , tourism, travel and the like.
Current account contains credits and debits.
Credit-
Credits of current account include : merchandise
exports(money income from sale of goods) and
invisible exports(income from services).
Invisible exports consists of transport services
insurance services ,foreign tourist services and
other services sold abroad and to foreigners and
income received on loans and investment abroad.
7. DEBITS -
Debits of current account include:
merchandise imports ,payments for goods
purchased from foreign countries and
invisible imports (payments to services
received from foreign countries).invisible
imports consists of transport services,
insuranse services, tourism abroad and
other services purchased from foreign
countries and payments on loans and
investmens of foreigners in our country.
8. CAPITAL ACCOUNT
Capital account is divided into three parts ,
1. Private capital
2. Banking capital
3. Official capital
Private capital is further divided into long
term and short term.
Long term private capital is with the maturity
period of more than one year and short
term capital is with the one year.
9. LONG –TERM PRIVATE CAPITAL INCLUDES;
Foreign investments-both direct and
portfolio
Long term loans
Foreign currency deposits
11. OFFICIAL SETTLEMENTS ACCOUNT
Official settlements account represent the official sales of foreign
currencies and other reserves to foreign countries or official
purchase of foreign currencies or other reserves from foreign
countries.
12. YEAR TRADE
BALANCE
INVISIBLE
S (NET)
CURRENT
ACCOUNT
( NET)
CAPITAL
ACCOUNT
(NET)
RESERVE
USE
(-
INCREASE
)
1999-2000 -17841 13141 -4698 10840 6142
2002-2003 -10690 17035 6345 10640 16985
2003-2004 -15454 26015 10561 20860 31421
2004-2005 -33702 -31232 -2470 28629 -26159
2005-2006 -51841 42655 -9186 24238 -15052
