Balance of Payments

It is important to measure the performance of an economy. Balance of Payment (BOP) is one way to do so. It shows the big picture of the total transactions of an economy with other economies. It takes the net inflows and outflows of money into account and then differentiates them into sections. It is important to balance all accounts of BOP in case of an imbalance so that the economic transactions can be measured and taken into account in a systematic and prudent manner.

Balance of Payment is a statement that shows an economy’s transactions with the remaining world in a given duration. Sometimes also called the balance of international payments, BOP includes each and every transaction between a nation’s residents and its non-residents.

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