Balance of Payments

Question 1

what is the balance of payments of a country?

Answer 1

a record of a countries monetary transactions with the rest of the world for a period of time (usually a year).

it deals with the inflows and outflows of funds to and from other countries.

composed of current (visible vs. invisible), capital and financial accounts.

Question 2

what is the balance of payments on the current account?

Answer 2

it refers to the difference between total exports and total imports:

(visible&invisible exports) - (visible&invisible imports)

Question 3

define income in terms of the BoP

Answer 3

income is net factor from abroad

i.e. dividends, interest and repatriation of profits

Question 4

is the Irish net factor income from abroad positive or negative.

Answer 4

has been negative for 20 years.

significant number of non-national people and multinational companies in Ireland.

this decreases the value of the current account

Question 5

what are current transfers?

Answer 5

subsidies and monies receivable from and taxes payable to the EU.
it also includes aid payments to non-governmental organizations and transfers related to non-life insurance business.

Question 6

what is the capital account?

Answer 6

a record of a country’ s receipts and payments for capital items

i.e. a record of a country’ s inflow and outflow of capital/ items of a non-recurring nature.

Question 7

balance of payments on capital account…

Answer 7

1. the amounts received under the EU Regional Development Fund (ERDF).
   e. g. co-finance projects that preserve and create jobs (infrastructure, local development,…)
2. the amount of acquisitions and disposals of non-produced, non-financial assets.
   e. g. patents and copyrights

Question 8

what is the financial account

Answer 8

it deals with transactions in foreign financial assets and liabilities.

Question 9

balance of payments on financial account…

Answer 9

DIRECT INVESTMENT
any FDI investment into Ireland (e.g. google)

PORTFOLIO INVESTMENT
acquisition and disposal of equity and debt securities

OTHER INVESTMENT
loans, currency, deposits, financial derivatives, other debtors and creditors

RESERVE ASSETS
assets that qualify under the control of the central bank of Ireland

NET ERRORS / OMISSIONS
need to estimate figures to a certain degree.