Your SlideShare is downloading. ×
Balance of payment
Balance of payment
Balance of payment
Balance of payment
Balance of payment
Balance of payment
Balance of payment
Balance of payment
Balance of payment
Balance of payment
Balance of payment
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Balance of payment

524

Published on

This topic relates to the International Finance's topic "Balance of Payment".

This topic relates to the International Finance's topic "Balance of Payment".

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
524
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
44
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Rehan Ehsan INTERNATIONAL FINANCE The University of Lahore (Lahore School of Accounting & Finance) Contact: +92 321 8880397 Email: rehan.ehsan89@gmail.com
  • 2. What is balance of payment ?   The balance of payment is an accounting record of all economic transactions between the resident of a country and resident of foreign countries. OR It is a systematic record of economic transaction of a reporting country with the rest of the world over the specific period of time.
  • 3. What are it’s functions ? There are several functions of balance of payment:  It is used to summarize all international economic transactions for that country during a specific time period, usually a year.  It reflects all payments and liabilities to foreigners (debits) and all payments and obligations received from foreigners (credits).  BOP is one of the major indicator of a country ‘s status in international trade, with net capital out flow.
  • 4. The balance, like other accounting statements is prepared in single currency, usually the domestic. Foreign assets and flows at the exchange rate of the time of transaction.
  • 5. How it works in country ? For balance of payments, two types of accounts work in a country. These are:  Current account  Capital account
  • 6. Current account It describes the current economic transaction of a country, it includes:  Export and imports  Balance of services traded (e.g., insurance)  Expenditure on health (e.g., if a person go abroad for medical treatment)  Expenditure on education  Interest on loan and profits
  • 7. Capital account Capital account describes the capital inflow and outflow. It included the foreign investment and foreign loans.
  • 8. Effect on economy If 1- Receipts > Payments surplus or favorable balance of payments positive effect on economy. 2- Payments > Receipts Deficits balance of payments unfavorable for economy
  • 9. Causes of deficit BOP Decrease in exports: due to Inflation Energy crises Increase in cost of production Backward technology etc… Increase in imports: due to Inflation Decrease in domestic production etc…
  • 10. Measures to improve the BOP    Tight fiscal and monetary policies Decrease in cost of production Restriction on imports
  • 11. THANK YOU FOR YOUR PATIENCE 

×