The Balance of Payments

Abstract

Before coming to grips with the theories of commercial and financial flows, we must have a clear idea of what a balance of payments is and be able to understand the content of the statistical data presented therein. Although the various national presentations look different, all obey a common set of accounting rules and definitions, which can be given a general treatment. Furthermore, where possible, the IMF International Monetary Fund) publishes the balances of payments of all member countries in a standardized presentation (see the IMF’s publications Balance of Payments Statistics Yearbook and International Financial Statistics) in accordance with the classification scheme of the Fund’s Balance of Payments Manual. This contains the recommended concepts, rules, definitions, etc., to guide member countries in making their regular reports on the balance of payments, as stipulated in the Fund’s Articles of Agreement; at the time of writing the latest edition is the fifth (henceforth referred to as the Manual).