abhishreshthaa
Abhijeet S
UNILATERAL TRANSFERS
Unilateral transfers or ‘unrequited receipts’, are receipts which the residents of a country receive ‘for free’, without having to make any present or future payments in return. Receipts from abroad are entered as positive items, payments abroad as negative items.
Thus the unilateral transfer account includes all gifts, grants and reparation receipts and payments to foreign countries. Unilateral transfer consist of two types of transfers:
(a) government transfers (b) private transfers.
Foreign economic aid or assistance and foreign military aid or assistance received by the home country’s government (or given by the home government to foreign governments) constitutes government to government transfers. The United States foreign aid to India, for BOP 9but a debit item in the US BOP). These are government to government donations or gifts. There no well worked out theory to explain the behaviour of this account because these flows depend upon political and institutional factors.
The government donations (or aid or assistance) given to government of other countries is mixed bag given for either economic or political or humanitarian reasons. Private transfers, on the other hand, are funds received from or remitted to foreign countries on person –to –person basis. A Malaysian settled in the United States remitting $100 a month to his aged parents in Malaysia is a unilateral transfer inflow item in the Malaysian BOP.
An American pensioner who is settled after retirement in say Italy and who is receiving monthly pension from America is also a private unilateral transfer causing a debit flow in the American BOP but a credit flow in the Italian BOP. Countries that attract retired people from other nations may therefore expect to receive an influx of foreign receipts in the form of pension payments.
And countries which render foreign economic assistance on a massive scale can expect huge deficits in their unilateral transfer account. Unilateral transfer receipts and payments are also called unrequited transfers because as the name itself suggests the flow is only in one direction with no automatic reverse flow in the other direction.
There is no repayment obligation attached to these transfers because they are not borrowings and lending’s but gifts and grants exchanged between government and people in one country with the governments and peoples in the rest of the world.
Unilateral transfers or ‘unrequited receipts’, are receipts which the residents of a country receive ‘for free’, without having to make any present or future payments in return. Receipts from abroad are entered as positive items, payments abroad as negative items.
Thus the unilateral transfer account includes all gifts, grants and reparation receipts and payments to foreign countries. Unilateral transfer consist of two types of transfers:
(a) government transfers (b) private transfers.
Foreign economic aid or assistance and foreign military aid or assistance received by the home country’s government (or given by the home government to foreign governments) constitutes government to government transfers. The United States foreign aid to India, for BOP 9but a debit item in the US BOP). These are government to government donations or gifts. There no well worked out theory to explain the behaviour of this account because these flows depend upon political and institutional factors.
The government donations (or aid or assistance) given to government of other countries is mixed bag given for either economic or political or humanitarian reasons. Private transfers, on the other hand, are funds received from or remitted to foreign countries on person –to –person basis. A Malaysian settled in the United States remitting $100 a month to his aged parents in Malaysia is a unilateral transfer inflow item in the Malaysian BOP.
An American pensioner who is settled after retirement in say Italy and who is receiving monthly pension from America is also a private unilateral transfer causing a debit flow in the American BOP but a credit flow in the Italian BOP. Countries that attract retired people from other nations may therefore expect to receive an influx of foreign receipts in the form of pension payments.
And countries which render foreign economic assistance on a massive scale can expect huge deficits in their unilateral transfer account. Unilateral transfer receipts and payments are also called unrequited transfers because as the name itself suggests the flow is only in one direction with no automatic reverse flow in the other direction.
There is no repayment obligation attached to these transfers because they are not borrowings and lending’s but gifts and grants exchanged between government and people in one country with the governments and peoples in the rest of the world.