what is the balance of payments we can define the balance of payments or bop as an accounting statement that summarizes economic transactions between residents of a country with non-residents for a specific period to put it simply the bop is like a giant receipt that shows all the flows or transactions by a country with non-residents in different areas of the economy who are the country's residents a person is considered a resident of a country if he or she has stayed or intends to stay in that country for one year or more similarly a business enterprise is considered a resident of a country if it engages for a year or more in the production of goods or delivery of services on a significant scale in that country thus in accounting for bob transactions nationality is not the basis for determining an individual's country of residence the types of economic transactions that residents engage in can be classified into current account capital account or financial account transactions current account transactions cover those transactions involving goods services and income goods include fresh and manufactured goods and raw materials mineral fuels capital and consumer goods services include transport travel financial telecommunications computer and information services and royalties from patents and copyrights among others such flows are recorded as exports or imports of goods and receipts or payments of services current account also includes transactions covering the provision of labor or financial resources including salaries of resident workers abroad and dividends grants and aids from our two non-resident government and international organizations are also recorded as current transfers for example when nation x exports goods to nationwide the payments made to nation x are recorded as a credit or inflow to nationx bob account and a debit to or outflow from nationwide's bop account then we have the transactions under the capital account this account tracks the flows or transactions of capital such as grants and donations for investment purposes capital account also includes the purchase or disposal of non-produced and non-financial assets such as copyrights and trademarks between residents and non-residents when a resident of nationwide donates funds to nation x to build infrastructure the funds received by nation x are recorded as a credit or inflow to nation nationx bob account and a debit to or outflow from nationwide's bop account lastly we have the transactions under the financial account this account records flows or transactions between residents and non-residents that involve financial assets and liabilities specifically transactions include cross-border investments in subsidiaries and affiliates placements in equity and debt securities loans and other investments when nationwide invests in foreign securities issued by nation x this is reflected as a debit to or outflow from nationwide's bop account and a credit or inflow to nationx bop account overall bop position can be in surplus deficit or in balance a surplus arises when inflows are greater than outflows while a deficit is incurred when outflows exceed inflows when inflows and outflows are equally matched the bop position is in balance most countries compile the bop because of its importance to national planning and impact on economic development here in the philippines the banco central philippines or bsp is tasked to compile analyze and publish developments in our country's balance of payments the bop report produced by the bsp provides vital information to citizens and policy makers for economic analysis forecasting and policy formulation if you want to learn more about the balance of payments and other central banking topics go to our website at www.bsp.gov.ph. and follow us on social media