Knowra Balance of payments Balance of payments The balance of payments is a record of economic transactions between a country’s residents and the rest of the world over a period. It organizes transactions into accounts that balance under double-entry bookkeeping.
Current account : The balance-of-payments account recording trade in goods and services, primary income, and secondary income. It records trade and income flows, a major part of the overall balance.
Credit and debit (balance of payments) : The recording conventions that classify balance-of-payments entries as credits or debits. These conventions determine how each transaction is entered in the accounts.
Balance-of-payments crisis : A crisis in which a country cannot meet external payment obligations or defend its currency without disruptive measures. Persistent financing pressures recorded in external accounts can culminate in such a crisis.
Fiscal balance : The difference between a government's revenues and expenditures over a period. It measures public finances, not transactions between residents and the rest of the world.
Capital account : The balance-of-payments account recording capital transfers and transactions in nonproduced, nonfinancial assets. It captures transfers and asset transactions separate from trade and investment flows.
Foreign exchange market : A market where currencies are exchanged at agreed prices. Cross-border payments often require currency exchange, linking transactions to currency markets.
International Monetary Fund : An international organization that supports monetary cooperation and lends to countries facing external financing problems. It uses external-account analysis when assessing financing needs and designing lending programs.
National income accounting : A framework for measuring an economy's production, income, and expenditure. Its identities connect the current account with national saving and investment.
Financial account : The balance-of-payments account recording cross-border transactions in financial assets and liabilities. It records the investment flows that accompany international lending, borrowing, and asset ownership.
Exchange rate : The price of one currency expressed in another currency. Currency values affect the domestic-currency measurement of external transactions.
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