The balance of payment essay example

Trade surplus Content Standards Standard 5: Students will understand that:

The balance of payment essay example

Balance of Payments Summary Statement Essay Sample

The same has been thoroughly revised and updated by Ms. Shilpa Jain for publication on the website www. Crore to Rs. With a view to standardising the concepts and definitions, classificatory schemes and conventions applied in the compilation of balance of payment statistics by various countries, the International Monetary Fund IMF has prescribed a Balance of Payment Manual.

India, as in the case of other member countries of the IMF, has adopted the same as a conceptual and methodological basis for compiling her balance of payment account.

Though the resident status of an individual is conceived in terms of the permanence of interest within a given territory, the rule of thumb adopted for recognition f such permanence is a stay of one year or more. Tourist and commercial travellers, employees of foreign governments and international bodies on a mission of less than one year and seasonal workers from foreign countries, are all considered as residents of the economy in which they normally live.

Major exceptions to this are the official diplomatic and consular representatives, members of armed forces and other government personnel of a foreign country stationed in a given country who are treated together with their dependents as non-residents for the country of their posting or as residents of the country they represent.

Current and Capital Accounts In BOP accounting, transactions relating to goods, services and income, and current transfers constitute the current account, while those relating to claims and liabilities of a financial nature and capital transfers and acquisition or disposals of non-produced, non-financial assets which go to finance the deficit on current account, or to absorb its surplus, form the capital account.

The sum of these current and capital account transactions together constitutes the basic balance on BOP and theoretically it should be finally rounded up. The double-entry accounting should be closed with the help of: Incidentally, the objective of SDRs serving as a principal reserve asset was scuttled in the midst of the controversy regarding the justification or otherwise for additional reserve assets.

The above is the theoretical position; in reality, due to myriad discrepancies arising from differences in timing, coverage, valuation and possible inaccurate estimation which also includes clandestine capital flight through various devicesthe credit side of the double entry accounting does not exactly match the sum of all debit entries.

As per the IMF Manual, imports and exports of goods merchandise should be presented under free-on-board f. Such freight and insurance paid to foreign shipping and air carriers should be treated as an outgo debit under the invisible sub-items, transportation and insurance services, while that earned by domestic carriers has to be treated as receipts credit under the same subitems.

However, the BOP data put out by the Indian authorities Reserve Bank of India as well as the Government of India make a major departure from the IMF manual in that while they present exports on an FOB basis they set out imports on CIF cost, insurance and freight basis on the ground of the nature of data availability, that is, while exports declarations are uniformally on f.

Incidentally, it is found that many other countries conduct periodical sample studies of import invoices, which facilitate such a distinction and estimate the proportion of freight, insurance and other distributive services in the total CIF value of imports and thus apply the results for deriving the f.

Interestingly, the RBI did conduct such surveys in the past for converting into f. Apparently a survey, which indicated that freight and insurance elements constituted of about four per cent of the c.

The balance of payment essay example

Though, since October the relevant forms specify the f. Foreign trade data relate to merchandise trade through all the recognized seaport, airports, land customs stations and inland container depots of India. Data on exports, which include re-exports, relate to fob values and imports relate to c.

Exports are based on the general system of recording, according to which re-exports relate to Indian merchandise previously imported into India.Importance of Balance of Payments as an Accounting Measure (Essay Sample) Instructions: One of the more important measures in regard to international economics is the balance of payments.

Essay Balance of Payment in Africa.

Balance Of Payment Essay Sample

This was all related to the global financial and economic crisis which affected the balance of payment. An example would be Kenya where the post election violence really devastated the country’s financial crisis.

Balance of Payment Essay. Firstly, this essay will talk about the definition of balance of payments, what the meaning of balance of payments has been in deficit and how to improve balance of payment. Balance of payments is a record of all recorded financial transactions between the UK and the rest of the world in a particular financial year.

Balance of payments in the UK Essay. In UK, balance of payments always deficit nowadays - Balance of payments in the UK Essay introduction.

This essay will investigate the relation of balance of payments and what UK government can do to improve the balance of payment. Balance Of Payment Essay Sample Balance of Payment is the recording system of economic and financial flows that take place over a specified time period .

Balance of Payments Summary Statement Essay Sample. The BoP is a summary statement in which, in principle, all the transactions of the residents of a nation with the residents of all other nations are recorded during a particular period of time, usually a calendar year.

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