COMPONENTS OF BALANCE OF

PAYMENTS
DEFINITION

“Balance of Payments is the record of the economic and

financial flows that take place over a specified time period
between residents and non-residents of a given country”.
Components of Balance Of Payments

The Current Account.

The Capital Account.

The Reserve Account.

 The Current Account

• Merchandise

• Invisibles

• Unilateral transfers
 The Capital Account

• Direct investment

• Portfolio investment

• Capital flows
 The Reserve Account

• It is government owned assets.

• Only purchase and sales by central bank of country.

• Changes in reserve account are surplus, deficit in BOP