2. DEFINITION OF BALANCE OF PAYMENT:
• The balance of payments provides an overview of a country's international
transactions. It records the value of goods and services that a country has sold
to or bought from the rest of the world during a specified time period,
normally a year.
• Example - Gifts/grants from one country to another; Investment made
abroad or received from abroad; Income on investments received from abroad
or remitted broad; goods & service import & export.
3. COMPONENT OF BALANCE OF PAYMENT:
• Current account: the inflow and outflow of goods and services.
• Capital account: The capital account represents transfer of money and other capital items
and changes in the country's foreign assets and liabilities resulting from the transactions
• Unilateral transfer account: These payments are only gifts from one country to another.
• Reserve Account: The reserve account, a subdivision of the capital account, is the foreign
currency and securities held by the government, usually by its central bank, and is used to
balance the payments from year to year. The reserves increases when there is a trade
surplus and decreases when there is a deficit.
• Adjusting Account: To match the debit and credit side some adjustment is made under this
accounts.
4. TABLE OF BALANCE OF PAYMENTS:
Name 2020-21
(12 M)
2020-21
(9 M)
2021-22
(12 M)
2021-22
M)
Total Export 45.60 32.90 43.70 58.40
Total Import 71.00 50.20 71.40 90.00
Primary Income -3.40 -2.40 -2.20 -3.40
Secondary Income 25.40 19.00 15.80 16.20
Current Account -3.80 -0.60 -14.10 18.80
Capital + Errors 13.10 8.50 11.00 14.50
Overall Balance 9.10 7.00 -3.10 -4.30
5. EXPLAIN OF CURRENT ACCOUNT:
Name 2020-21
M)
2020-21
(9 M)
2021-22
(12 M)
2021-22
(9 M)
Total Export 45.60 32.90 43.70 58.40
Total Import 71.00 50.20 71.40 90.00
Primary Income -3.40 -2.40 -2.20 -3.40
Secondary Income 25.40 19.00 15.80 16.20
Current Account -3.80 -0.60 -14.10 18.80
Current Account calculated for a specific period i.e. (43.7+15.80)-(71.40+2.20)=-14.10
The balance does not carried after a specific period of time.
6. IMPORTS STATUS 8 MONTHS
Name 2020-21
(8 M)
2021-22
(8 M)
Change % of
Change
Goods & Grant 4.77 6.46 1.69 8.30%
Intermediate Goods 22.66 31.81 11.15 55.00%
Investment Related 13.28 19.36 6.08 30.00%
Other Imports 5.52 6.86 1.34 6.60%
Total 46.22 66.50 20.26
7. RECOVERY PLAN:
• To increase of Export earnings
• To reduce of Import
• The central bank can sell dollar from reserve.