Balance of Payment (BOP)
If the trade transactions of a country are considered both in terms of goods and services, we call it as Balance of Payment. BOP can be defined as an accounting statement that provides a systematic record of all economic transactions between the residents of a country and the rest of the world in a given period of time (usually one year). Residents include all individuals, businesses, government and their agencies and international organisations. There are three types of BOP.
- Favourable BOP: Total value of exports > Total value of imports
- Unfavourable BOP: Total value of imports > Total value of exports
- Balanced BOP: Total value of exports = Total value of imports