abhishreshthaa
Abhijeet S
Resident
The term resident is not identical with “citizen” though normally there is a substantial overlap. As regards individuals, residents are those individuals whose general centre of interest can be said to rest in the given economy.
They consume goods and services; participate in economic activity within the territory of the country on other than temporary basis. This definition may turnout to be ambiguous in some cases.
The “Balance of Payments Manual” published by the “International Monetary Fund” provides a set of rules to resolve such ambiguities.
As regards non-individuals, a set of conventions have been evolved. E.g. – government and non profit bodies serving resident individuals are residents of respective countries, for enterprises, the rules are somewhat complex, particularly to those concerning unincorporated branches of foreign multinationals.
According to IMF rules these are considered to be residents of countries in which they operate, although they are not a separate legal entity from the parent located abroad.
International organisations like the UN, the World Bank, and the IMF are not considered to be residents of any national economy although their offices are located within the territories of any number of countries.
To certain economists, the term BOP seems to be somewhat obscure. Yeager, for example, draws attention to the word ‘payments’ in the term BOP; this gives a false impression that the set of BOP accounts records items that involve only payments.
The truth is that the BOP statements records both payments and receipts by a country. It is, as Yeager says, more appropriate to regard the BOP as a “balance of international transactions” by a country.
Similarly the word ‘balance’ in the term BOP does not imply that a situation of comfortable equilibrium; it means that it is a balance sheet of receipts and payments having an accounting balance.
Like other accounts, the BOP records each transaction as either a plus or a minus. The general rule in BOP accounting is the following:-
a) If a transaction earns foreign currency for the nation, it is a credit and is recorded as a plus item.
b) If a transaction involves spending of foreign currency it is a debit and is recorded as a negative item.
The BOP is a double entry accounting statement based on rules of debit and credit similar to those of business accounting & book-keeping, since it records both transactions and the money flows associated with those transactions.
Also in case of statistical discrepancy the difference amount is adjusted with errors and omissions account and thus in accounting sense the BOP statement always balances.
The term resident is not identical with “citizen” though normally there is a substantial overlap. As regards individuals, residents are those individuals whose general centre of interest can be said to rest in the given economy.
They consume goods and services; participate in economic activity within the territory of the country on other than temporary basis. This definition may turnout to be ambiguous in some cases.
The “Balance of Payments Manual” published by the “International Monetary Fund” provides a set of rules to resolve such ambiguities.
As regards non-individuals, a set of conventions have been evolved. E.g. – government and non profit bodies serving resident individuals are residents of respective countries, for enterprises, the rules are somewhat complex, particularly to those concerning unincorporated branches of foreign multinationals.
According to IMF rules these are considered to be residents of countries in which they operate, although they are not a separate legal entity from the parent located abroad.
International organisations like the UN, the World Bank, and the IMF are not considered to be residents of any national economy although their offices are located within the territories of any number of countries.
To certain economists, the term BOP seems to be somewhat obscure. Yeager, for example, draws attention to the word ‘payments’ in the term BOP; this gives a false impression that the set of BOP accounts records items that involve only payments.
The truth is that the BOP statements records both payments and receipts by a country. It is, as Yeager says, more appropriate to regard the BOP as a “balance of international transactions” by a country.
Similarly the word ‘balance’ in the term BOP does not imply that a situation of comfortable equilibrium; it means that it is a balance sheet of receipts and payments having an accounting balance.
Like other accounts, the BOP records each transaction as either a plus or a minus. The general rule in BOP accounting is the following:-
a) If a transaction earns foreign currency for the nation, it is a credit and is recorded as a plus item.
b) If a transaction involves spending of foreign currency it is a debit and is recorded as a negative item.
The BOP is a double entry accounting statement based on rules of debit and credit similar to those of business accounting & book-keeping, since it records both transactions and the money flows associated with those transactions.
Also in case of statistical discrepancy the difference amount is adjusted with errors and omissions account and thus in accounting sense the BOP statement always balances.