Balance of payments is an account of monetary transactions that take place between residents in one country and other residents in the rest of the world over time. The transactions comprise exports and imports of goods, services, financial assets, liabilities, and transfer payments such as foreign aid. BOP can tell you whether a country has enough to pay for its imports and whether their economic output is sufficient enough to finance its growth. In other words, it’s an indicator of whether an economy is in a deficit or surplus and gives insight to what’s driving that outcome. When a country is in deficit, they import more goods, services, and capital than it exports, while surplus is the opposite. How It Works Balance of payments shows the payments and receipts between residents in one country and other international countries. This includes transactions that take place in both private and public sectors. When a country receives money, it’s known as a credit, and when they pay money to another country, it’s defined as a debit. In an ideal world, credits and debits would balance out making the