Payment balance definition

The term balance has several uses, as can be seen when consulting the dictionary of the Spanish Royal Academy ( RAE ).Opportunity we are interested in its meaning in the field of economy : it is known as balance to the result or the analysis of a comparison established between different variables.

A payment , on the other hand, is the disbursement of money or other value in order to cancel a debt or to finalize a purchase.It is known as payment to this act and the result thereof.

From these ideas, we can understand what the notion of balance of payments refers to.It is the record that compares the monetary disbursements and external charges of the economy of a country.

In addition to the above, we can point out that the balance of payments, which is a macroeconomic indicator, is composed or It has what are four main accounts such as these:-The balance of capital account, which proceeds to keep track of the movement of capital that exist in a country.That is, therefore, to be taken into account from the sale or purchase of goods up to what can be the aid received from abroad.-The account of errors and omissions.This becomes an essential element of the balance of payments given the circumstance that it is really complex the be able to calculate with absolute accuracy what are the imports and also the exports of a p ais.-The current account balance, which is the one used to be able to know in depth and in reality what is the state of the accounts that exists in a country.It is divided, in turn, into four more accounts: balance of transfers, trade balance, income balance and balance of services.Through it, income, imports, transfers, exports are included...-The financial account balance.Through this other account what you have in consideration it is both the investments that foreign countries make in which it is being analyzed and the loans that that can ask of others.

As we mentioned, each of these accounts will result in a surplus or a deficit.

The notions of balance of payments and trade balance are often confused.The trade balance is focused on exports and imports of commercial goods: the balance of payments, on the other hand, also includes other transactions , such as exports/imports of services and movements of financial capital.That is why I can say that the trade balance is included in the balance of payments.

The balance of payments, in short, records the total monetary transactions that are made, in a certain period of time, between one nation and the other countries .It is usual that the period considered to be annual and that the transactions are recorded in the currency of the country in question.

At the time of including all the elements, the balance of payments You should always be in equilibrium as funds are compensated through various mechanisms, without there being a deficit or a superavit ., there may be a temporary imbalance when the funds received exceed or are less than the use of those same funds.