THE BALANCE OF PAYMENTS (BP)

The balance of payments is the summary statement of the flow of economic transactions between the residents of one country and the rest of the world over a given period of time.

This summary statement comprises of such items as the export and import of all goods and services; all capital loans abroad and all borrowing from foreign countries; all gifts to and from foreign countries, including foreign aid; and all movements of gold and international reserves into and out of the country.

In this country, the Department of Commerce is responsible for calculating the balance of payments.

How are debits and credits defined in international transactions?

A debit represents the importing of an item such as a good, a service, a stock or a bond, a bank deposit, or gold. A debit adds to a nation’s demand for foreign currency. It receives a negative sign (-) in the balance of payments table.

A credit represents the exporting of an item such as a good, a service, a stock or a bond, a bank deposit, or gold. A credit item adds to a nation’s supply of foreign money. It receives a positive (+) in the balance of payments table.

Consider a few examples to aid in your understanding of the balance of payments:

Suppose a U.S. household purchases a car from Japan. The import of the car into the U.S. is recorded on the debit side (-) and creates a demand for Japanese currency (Yen). It adds to the supply of dollars.

Suppose a U.S. business sells a bond to a British household. The U.S. business, then, exports a bond. This would appear on the credit side (+) of the BP. It would increase the supply of British pounds. It adds to the demand for dollars.

Suppose the US gives wheat to Egypt. The exporting of the good, even as a gift, is recorded as a credit (+) and is called a unilateral transfer.

Assume a US citizen travels as a tourist to Germany. His expenditures in that country are classified as a debit (-) because he purchases (imports) a service (tourism) from that country. It also creates a demand for German marks.

The BP is often divided into three sections: current account, capital account, and financing method (deficit or surplus). A simplified table is as follows:

I. Current account

A. Merchandise
1. Exports (+)
2 Imports (-)

B. Services
1. Military (net)
2. Travel and transportation (net)
3. Investment income (net)

Balance of goods and services = A + B

C. Unilateral transfers
1. Government grants (excluding military)
2. Remittances and pensions

Balance on current account = A + B + C

II. Capital account

D. Long-term capital movements or flows
E. Short-term capital movements or flows

Official reserve transactions balance = A + B + C + D + E
“The line”______________________________________

(There is some debate about where to draw the line to determine the balance of payments surplus or deficit. Some economists draw the line after long-term capital movements but before short-term capital movements, since short-term assets are temporary and can be withdrawn at a moments notice.)

III. Financing (deficit or surplus) method
F. U.S. official reserve assets (net)
G. U.S. liabilities to foreign official agencies

(Official reserve assets of the U.S. include (1) gold, (2) convertible foreign currencies,
(3) reserve position at the International Monetary Fund (IMF), and Special Drawing Rights (SDRs). An SDR created by the IMF in 1968 because of a shortage of international liquidity is the official unit of account used between the IMF, central banks, and governments. Foreign official agencies are central banks of other countries that lend to the U.S. when they experience a deficit

اسئلة علي جزء ميزان المدفوعات

In the modern world economy, balance-of-payments
Deficits and surpluses can be eliminated

A. Through the market mechanism of flexible
Exchange rates.

B. If all nations adopt tight monetary policies.

C. Only if trade between nations is curtailed.

D. When the opportunity costs of production are
made the same in all countries

Which one of the following items represents a credit in the
U.S. balance of payment accounts?

A. U.S. imports of crude oil.
B. Expenditures of American tourists abroad.
C. Earnings belonging to foreign businesses that have
U.S. plants.
D. Loans to Americans by foreigners

The balance of trade is the
A. Same as the balance of the current account.
B. Balance on the capital account.
C. Balance on all international transactions.
D. Balance on the goods transactions in the current
Account

1. نظرية النفقات النسبية والنفقات المطلقة.
2. ميزان المدفوعات.
3. سعر الصرف .
4. سوق العملات الاجنبية .

Based on the type of review, each portion of the audit will take more or less time. However, all audits, except for the most basic, will include the following five steps:

STEP 1: PLANNING

We begin each audit with a Planning phase which does not usually require departmental involvement. The audit staff will review any past audit work, look over available literature on the department, and make a preliminary review of departmental income and expense. During this time, the auditors will also tentatively formulate our scope and audit plan, on which they will base the fieldwork.

STEP 2: INTRO MEETING

After you receive your introductory letter announcing the audit, we will call you to schedule an Introductory Meeting. These meetings typically last no longer than an hour and take place at your office, if possible. At this time you have the opportunity to meet the audit staff and ask questions about the upcoming audit work and the audit process. We encourage you to discuss any concerns you may have and any areas or business functions that you would like auditors to review. During the meeting, we will discuss the potential timeframe for the review, the audit objectives, and the audit logistics (facilities, availability of personnel, primary contacts, etc.). At this time, you may also provide the staff with the few pieces of information we request before each audit begins- a departmental organization chart, a contact list, and literature describing the department- if available.

STEP 3: FIELDWORK

In this step, the actual work of the audit is performed. The audit staff begins the Fieldwork by gathering information about the auditee's operations, gaining an understanding of departmental functions, and identifying areas of weakness and concern (as well as strengths). This work includes reviewing financial and budgeting activity, administrative and business procedures, critical departmental functions, information technology, and other activities specific to each auditee. The audit staff will conduct interviews with key personnel, observe departmental procedures, and periodically review the audit progress with the department heads and personnel. You many contact us at anytime throughout the audit with your questions or concerns regarding the audit process or audit findings. During the fieldwork, which is typically the lengthiest part of the audit, the audit staff identifies areas of risk and concern within the department's internal controls and procedures, all of which will be discussed with you before or at the conclusion of the fieldwork.

STEP 4: REPORTING

After the fieldwork is completed and our findings and concerns have been reviewed with you, the audit staff will first prepare a Draft Report. The draft report is transmitted to you for your review and in order for you to prepare your response. Responses typically include corrective action plans, the parties responsible for the action, and the timeline to complete the process. Once your response is received and we agree on the report text, the report is ready to be finalized. Your response is incorporated or attached where appropriate, and the Final Report is delivered to you and the appropriate parties in University management and the departmental reporting line. You will be given the opportunity to review the final report before the distribution is completed.

STEP 5: FOLLOW-UP

Depending on the nature of the audit or the audit findings, the Follow-Up procedure may formal or informal. In either case, after a reasonable period of time, the auditee will be contacted regarding the departmental progress with the corrective actions identified in the audit. At this time, we may perform a follow-up review concluding with a follow-up report. In most cases, the auditee is only contacted informally, possibly several times, to monitor the status of the department's progress. If you have any questions or new concerns in the follow-up period, we welcome you to share them at this time, so that we may determine if further
audit work is necessary

اللهم اغفر لوالدي وارحمه وعافة واعفوا عنه واكرم نزلة ووسع مدخلة واغسلة بالماء والثلج والبرد ونقه من الذنوب والخطايا كما ينقا الثوب الابيض من الدنس برحمتك ياارحم الراحمين