The definition of Balance of Payments states:
The difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment.
<h3>What is
Balance of Payments ?</h3>
The balance of payments is a tool in international trade that demonstrates the financial transaction made by a particular country with foreign countries. Its most often includes export, import and transfer payments.
Theoretically, it should be zero as a country's assets should equal the liabilities. However, in practice, that is not always the case, as the country's debits and credits can create a discrepancy in the balance of payments, which creates a surplus or deficit.
A favorable balance of payment means that a country exports exceed imports. B.O.P records economic transactions of goods and services as well as other payments such as international aid, capital flow, and international remittances. A Favorable or positive balance of payment means that the aggregate of country foreign inflow exceeds outflows.
Thus, we can say that above definition state Balance of Payments.
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