The balance of payments of a country is the record of all economic transactions between the residents of the country and the rest of the world in a particular period, most commonly a year. These transactions are made by everyone; individuals, firms and government bodies. Hence, the balance of payments includes all external visible and invisible transactions of a country . It also represents a summation of country’s current demand and supply of the claims on foreign currencies and of foreign claims on its currency. These transactions include payments for the country’s exports and imports of goods, services, financial capital, and financial transfers.It is prepared in a single currency, typically the domestic currency for the country concerned. Sources of funds for a nation, such as exports or the receipts of loans and investments, are recorded as positive or surplus items. Uses of funds, such as for imports or to invest in foreign countries, are recorded as negative or deficit items.
