The balance of payments is a collection of accounts conventionally grouped into three main categories with subdivisions in each. Three main categories are:
a) The Current Account: Under this are included imports and exports of goods and services and unilateral transfers, which reflect government and private gifts and grants.
b) The Capital Account: Under this are grouped transactions leading to changes in foreign financial assets and liabilities of the country.
c) The Reserve Account: In principle, this is not different from the capital account it as much as it relates to financial assets and liabilities. However, in this category, only reserve assets are included. These are the assets which the central bank of the country uses to settle the deficits and surpluses that arise in the other two categories.
No comments:
Post a Comment