Balance of Payments

1
Balance of Payments

• International
• Finance

2
Balance of Payments

• Current Account
• Deficit or Credit
• Capital Account
• Deficit or Credit
• Balance of Trade
• Deficit or Surplus
• Official Reserves
• Strong or Weak Dollar

3
2008 balance of paymentsfor Zeeland

• Current Account Capital Account
• Z-land export of goods ___ Z-land
  capital going abroad ___
• Z-land import of goods ___ Foreign
  capital coming into Z-land ___
• Z-land export of services ___ Balance on
  capital account ___
• Z-land import of services ___
• Balance of trade ___
• Net investment income ___
• Net transfers ___
• Balance on current account ___
• Balance of payments deficit / surplus___
• Official Reserves Account
• Official Reserves Transaction Balance ___

4
2008 balance of paymentsfor Zeeland

• Current Account Capital Account
• Z-land export of goods 300 Z-land capital
  going abroad -110
• Z-land import of goods -400 Foreign capital
  coming into Z-land 160
• Z-land export of services 150 Balance
  on capital account ___
• Z-land import of services -120
• Balance of trade ___
• Net investment income 10
• Net transfers -14
• Balance on current account ___
• Balance of payments deficit / surplus___
• Official Reserves Account
• Official Reserves Transaction Balance ___

5
2008 balance of paymentsfor Zeeland

• Current Account Capital Account
• Z-land export of goods 300 Z-land capital
  going abroad -110
• Z-land import of goods -400 Foreign capital
  coming into Z-land 160
• Z-land export of services 150 Balance
  on capital account 50
• Z-land import of services -120
• Balance of trade -70
• Net investment income 10
• Net transfers -14
• Balance on current account -74
• Balance of payments deficit / surplus
  -24
• Official Reserves Account
• Official Reserves Transaction Balance ___

6
2008 balance of paymentsfor Zeeland

• Current Account Capital Account
• Z-land export of goods 300 Z-land capital
  going abroad -110
• Z-land import of goods -400 Foreign capital
  coming into Z-land 160
• Z-land export of services 150
• Z-land import of services -120
• Balance of trade -70
• Net investment income 10
• Net transfers -14
• Balance on current account -74 Balance
  on capital account 50
• Balance of payments zero
• Official Reserves Account
• Official Reserves Transaction Balance 24

7

• Current Account
• Z-land export of goods 300
• foreign currency buys US dollars
• Z-land import of goods -400
• US dollars buy foreign currency
• Z-land export of services 150
• foreign currency buys US dollars
• Z-land import of services -120
• US dollars buy foreign currency
• Balance of trade -70
• Net investment income 10
• US citizens must use foreign currency income
  paid, to buy US dollars, if they want to use
  their income back in the US
• Net transfers -14
• US dollars buy foreign currency for expatriates
  who live abroad
• Balance on current account -74
• Leakage (remember spending equals income)

8

• Capital Account
• Z-land capital going abroad -110
• US dollars buy foreign currency
• for direct investment
• building or running a firm in a foreign
  country
• which pays revenue in that currency
• or indirect investment
• savings in foreign securities (equities,
  bonds)
• which pays interest in that currency
• Foreign capital coming into Z-land 160
• foreign currency buys US dollars
• for direct or indirect investment
• which pays US dollars as revenue or interest
• Balance on capital account 50
• Injection (remember spending equals income)