Balance of Payments

The Balance of Payments (BoP) records all financial transactions between a country and the rest of the world over a specific period. It includes trade (exports and imports), investments, loans, and financial transfers. The BoP is divided into two main parts: the current account, which tracks goods, services, income, and current transfers, and the capital and financial account, which records investments, loans, and other financial assets. A country’s BoP helps determine whether it is a net borrower or lender in the global economy, and any imbalances may indicate financial or economic issues.