Balance of Payment Components

The BOP is composed of the current account that measures the flow of goods and services, the capital account that measures transfers of capital, and the financial account that records investment flows.

Current Account

1 Merchandise trade. all commodities and manufactured goods bought, sold, or given away.

2 Services. tourism, transportation, engineering, and business services. Fees from patents and copyrights.

3 Income receipts. income derived from ownership of assets; income on foreign investments.

4 Unilateral transfers. one-way transfers of assets and foreign direct aid or gifts.

Capital Account

1 Capital transfers. debt forgiveness and migrants’ transfers, the transfer of title to fixed assets and the transfer of funds linked to the sale or acquisition of fixed assets, gift and inheritance taxes, death duties, uninsured damage to fixed assets, and legacies.

2 Sales and purchases of non-produced, non-financial assets and intangible assets.

Financial Account

1 A country’s assets abroad. official reserve assets, government assets, and private assets. Include gold, foreign currencies, foreign securities, the government’s reserve position in the IMF, direct foreign investment, and claims reported by resident banks.

2 Foreign-owned assets in the reporting country. official assets and other foreign assets. Include securities issued by the reporting country’s government and private sectors, direct investment, and foreign liabilities reported by the reporting country’s banking sector.