Analysis_Of_Balance_Of_Payment

Analysis Of Balance Of Payment Introduction The Balance of Payment of an economy represents a record of all international money flows between domestic and foreign residents over a specified period of time, usually measured at an annual basis. These flows are usually a result of international trade transactions & other international finance activities such as loans, transfers etc. that are executed by individuals, firms or governments. Simply put, the Balance of Payment (BoP) is calculated using the following equation: BoP = (X - M) + (CI - CO) + ∆FXB Where: X = Exports M = Imports CI = Cash Inflow CO = Cash Outflow (X-M) = Current Account (CI-CO) = Capital Account ∆FXB = Change in Official Foreign Exchange Reserved Balance The recording of the transactions for the balance of payment uses a double entry book keeping method, so all entries or transactions are offset by a transaction of the opposite type. As a result the BoP equation always adds up to zero, i.e. BoP=0 always. The BoP can be broken down into various components among, which are: • Current Account • Capital Account • Changes to Official Forex Reserves The BoP can be analyzed to review the performance of a country's economy. Detailed analysis of the various components can give valuable information about the various elements of a egypt, million, gdp, economy, egyptian, exports, market, foreign, deficit, 2001, trade, reform, rate, exchange, eu, economic, account, us$, structural, spending, pound, debt, bop, balance, agreement, uk, sector, new, imports, growth, government, following, public, prices, payment