- Foreign loans/borrowings, etc.
Likewise, the major uses are:- Imports of goods and services ;
- Purchase of foreign financial assets ;
- Foreign lending’s and so on.
Obviously, sources increase the external purchasing power of a country; conversely uses
decrease its purchasing power.
- Presentation Of Balance Of Payments
A BOP statement is divided into (i) Current account, (ii) Capital account and (iii) Official
reserves account.
The data needed to prepare different accounts are collected from various sources. The
data on imports and exports are gathered from customs authorities.
The Current Account is a record of the trade in goods and services among countries. The
trade in goods is composed of exports and imports.
The trade in services (also called invisibles) includes interest, dividends, tourism/ travel
expenses and financial charges, etc.
Unilateral transfers consist of remittances by migrants to their kith and kin, and gifts,
donations and subsidies received from abroad.
The Capital Account is divided into foreign direct investment (FDI), portfolio investment
and private short-term capital flows. FDIs are for relatively longer period of time and
portfolio investments have a maturity of more than one year when they are made. The
short-term capital flows mature in a period of less than one year.
Table 1 Typical BOP Statement
A. Current Accounts
Goods Account
Exports (+)
Imports (-)
Balance on Goods Account = A(I)Services Account
Receipts as interest and dividends, tourism receipts for travel and financial changes (+)