National governments keep track of financial flows into and out of their countries by using balance of payment (BOP) accounting, a system for measuring a country’s sources and uses of foreign exchange over a specified period of time, generally one year. Policy makers, economists, and business analysts use BOP indicators to track a country’s economic performance and position vis-à-vis the rest of the world. BOP indicators also provide insights into potential country risks. This note provides an overview of how BOP accounting works, how a BOP statement is organized, and what some of the important numbers mean.
Note on Understanding Balance of Payments
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