What is a Country's Balance of Payments?

Balance of payments

The balance of payments statement is part of the basic accounting statement in the national economic accounting system. A table of income and expenditure that reflects the total economic exchanges between a country (or region) and a foreign country in a certain period of time. It is a systematic record of the actual dynamics of trade, non-trade, capital exchanges and reserve assets in the process of economic and technological exchanges between one country and other countries. It is an important tool for balance of payments accounting. It can comprehensively reflect a country's balance of payments status, balance of payments structure, and changes in reserve assets, providing a basis for formulating foreign economic policies, analyzing basic economic factors affecting the balance of payments, and adopting corresponding control measures. According to the International Monetary Fund's Balance of Payments Manual (Fifth Edition), the standard composition of the balance of payments account consists of two basic parts: current account, capital, and financial account. ^[1]

Accounting requirements

A country is in a certain period (one year, half year, quarter or month)

(1) All items that cause foreign exchange income in the country are credited

(1) Perform

Resident principle

which is

1. Major balances of payments

Trade account balance: The difference between the import and export of goods is extremely important in the current account, and the data is easy to collect quickly. Traditionally it has often been the representative of the entire balance of payments.

Current account balance: Includes goods, services, and one-way transfers of income and expenditures. Current account balances are generally a country's balance of payments target and are used to reflect the country's international competitiveness.

Basic account balance: Includes the balance formed by the current account and the long-term capital account.

Comprehensive account balance: Includes most of the sub-items in the current account and capital and financial accounts. The balance is formed by excluding official reserves only.

2. Analysis of balance of payments: general analysis, project analysis.