6 - Balance of Payments
6 - Balance of Payments
6 - Balance of Payments
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Principles of BoP Accounting
1) All transactions that provide Turkey with additional supply of foreign
money should be recorded with a plus (+) sign to reflect that they are
credits:
• Foreign money IN (our receipts)
• Turks are provided with additional supply of foreign money
As a result of:
• Exports of goods (e.g. textile products)
• Payments from foreign tourists
• Investments by foreigners in Turkey
– through lending by foreigners (we borrow)
– physical assets
• Unilateral payments (e.g. workers’ remittances, foreign aid)
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Principles of BoP Accounting
2) All transactions that provide foreigners with additional
supply of foreign money from Turkish residents
should be recorded with a negative (-) sign to reflect
that they are debits
Foreign money OUT (our payments) → (-)
→ Debits
As a result of
• Imports of goods
• Payments by Turkish tourists abroad
• Investment by Turkish residents at foreign countries
– E.g. money deposited in Swiss banks
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BoP Accounts
• International transactions are summed into 2 major categories
• The BoP accounts are broken down into:
– Current Account (Cari İşlemler hesabı)
– Capital and Financial Accounts (Sermaye ve Finans Hesapları)
• Total change in Reserves
Merchandise exports Net exports of goods → Component of GNI and directly
Merchandise Imports
Net Services
} and services contributes to production and
employment
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Current Account Deficit
• ‘Current Account Deficit’ (CAD) can be defined
as the total of:
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Current Account Deficit (CAD)