Fact and Prophecies

Niger, Nigeria, Mali, Mauritania, Algeria, Libya, Western Sahara Morocco and Tunisia are some of the few countries passing from transition state of social,economical and political instability soon would become volatile like Sudan.

Ethiopia Somalia and Kenya will follow and pass from the same situation as above even most likey Sri Lanka who was once the center of tourism around the world. This is a crucial stage for African Union to get united and align themselves with Powerful players to succeed in the race.

The situation in Ukraine's invasion by Russian Federation and post pandemic erra has already threatened EU and its Allies to align themselves in a way to avoid economic and political collapse. The world is actively relying on countries with rich resources of food, oil and gas and these are the main resources for all the countries to balance their position and stabilize their society.

Another war is currently uncertainty with a Dollar- BRICS clash for which the great powers are struggling and surviving to save its future dominance but which will be the future trade direction and denomination, its a question of time to get an answer for.

US hit by Afghan war, China by Covid-19, UK by Brexit and Queen's demise, France by Israel expansion and Iran's influence in the Gulf region and Russia by Ukrain war and International criticism and blockage by US Allies has made the race a complicated and sophisticated war for future survival. The only countries left to take advantage of this condition are Japan and India which are plentiful in technology, trade, business, IT and manpower are trying to adopt friendly relationships with those who can be thier far ended strategic and economic partners.

What is Balance of Payment (BOP)
Balance of Payment (BOP)


The balance of payment is the statement that files all the transactions between the entities, government anatomies, or individuals of one country to another for a given period of time. All the transaction details are mentioned in the statement, giving the authority a clear vision of the flow of funds.

After all, if the items are included in the statement, then the inflow and the outflow of the fund should match. For a country, the balance of payment specifies whether the country has an excess or shortage of funds. It gives an indication of whether the country’s export is more than its import or vice versa.

Types of Balance of Payment
The balance of payment is divided into three types:

Current account: This account scans all the incoming and outgoing of goods and services between countries. All the payments made for raw materials and constructed goods are covered under this account. Few other deliveries that are included in this category are from tourism, engineering, stocks, business services, transportation, and royalties from licenses and copyrights. All these combine together to make a BOP of a country.

Capital account: Capital transactions like purchase and sale of assets (non-financial) like lands and properties are monitored under this account. This account also records the flow of taxes, acquisition, and sale of fixed assets by immigrants moving into the different country. The shortage or excess in the current account is governed by the finance from the capital account and vice versa.

Finance account: The funds that flow to and from the other countries through investments like real estate, foreign direct investments, business enterprises, etc., is recorded in this account. This account calculates the foreign proprietor of domestic assets and domestic proprietor of foreign assets, and analyses if it is acquiring or selling more assets like stocks, gold, equity, etc.

Importance of Balance of Payment
A balance of payment is an essential document or transaction in the finance department as it gives the status of a country and its economy. The importance of the balance of payment can be calculated from the following points:

It examines the transaction of all the exports and imports of goods and services for a given period.
It helps the government to analyse the potential of a particular industry export growth and formulate policy to support that growth.
It gives the government a broad perspective on a different range of import and export tariffs. The government then takes measures to increase and decrease the tax to discourage import and encourage export, respectively, and be self-sufficient.
If the economy urges support in the mode of import, the government plans according to the BOP, and divert the cash flow and technology to the unfavourable sector of the economy, and seek future growth.
The balance of payment also indicates the government to detect the state of the economy, and plan expansion. Monetary and fiscal policy are established on the basis of balance of payment status of the country.