Balance of payment (BOP)

The balance of payments (BOP) is a record of all economic transactions between individuals and institutions in one country and the rest of the world over a period. The balance of payments is an accounting statement, which records various financial flows into and out of a country's economy. The balance of payments also reflects changes in ownership between domestic and foreign residents. 

The BOP Graphs are used in accounting to record financial transactions between individuals or businesses within an economy over a time period such as one year or quarter etc.

There are three main components of balance of payments (BOP): current account, capital account, and financial account:

1. Current account — includes trade in goods and services, income from investments, and transfers like remittances from expatriates.
2. Capital account —  includes net lending/borrowing by residents to non-residents; acquisition of assets by non-residents in a country; the issue of securities by residents to non-residents; foreign direct investment into an economy; borrowing by governments/public sector entities from abroad, etc.
3. Financial account — contains official reserves held at central banks plus international liquidity (gold & SDR holdings) minus external debt