Balance of Payments (BoP) is a comprehensive record of all economic transactions between a country and the rest of the world over a specific period (usually a quarter or a year).
Key Rule of BoP
In theory, the Balance of Payments always balances
Any deficit or surplus in one account must be offset by changes in other accounts or reserves.
Why BoP Matters
- Influences exchange rates
- Signals economic strength or vulnerability
- Guides monetary and fiscal policy
- Important for foreign investors and international trade decisions
Example
THE ETERNAL SOVEREIGN 