balance of payments
C1Formal, Technical, Academic
Definition
Meaning
A systematic record of all economic transactions between residents of one country and residents of other countries during a specific period, showing the difference between total payments to and receipts from foreign countries.
A comprehensive accounting statement that summarizes a country's international economic transactions, including trade in goods and services, income flows, and financial transfers, used to assess a nation's economic health and its position in the global economy.
Linguistics
Semantic Notes
Always used as a singular noun phrase; refers to an accounting framework rather than a physical object; often abbreviated as BOP in technical contexts.
Dialectal Variation
British vs American Usage
Differences
No significant lexical differences; identical term used in both varieties.
Connotations
Identical technical and economic connotations in both varieties.
Frequency
Equally frequent in economic and financial discourse in both UK and US contexts.
Vocabulary
Collocations
Grammar
Valency Patterns
The balance of payments shows...A country's balance of payments reflects...According to the balance of payments...Vocabulary
Synonyms
Strong
Neutral
Weak
Vocabulary
Antonyms
Phrases
Idioms & Phrases
- “in the red (referring to a deficit)”
- “in the black (referring to a surplus)”
Usage
Context Usage
Business
Used in international business reports and financial analysis to assess country risk.
Academic
Central concept in international economics and macroeconomics courses.
Everyday
Rarely used in casual conversation; appears in quality news about the economy.
Technical
Precise term in economics, central banking, and international finance with defined components.
Examples
By Part of Speech
verb
British English
- The figures do not balance out in the current account.
- We must balance our international payments.
American English
- The accounts failed to balance last quarter.
- Policymakers aim to balance the payments deficit.
adverb
British English
- The economy is performing balance-of-payments-wise.
adjective
British English
- The balance-of-payments data was revised upwards.
- A balance-of-payments crisis loomed.
American English
- Balance-of-payments statistics are released monthly.
- The balance-of-payments situation is concerning.
Examples
By CEFR Level
- The news talked about the balance of payments.
- A country with a positive balance of payments earns more from abroad than it spends.
- The government is concerned about the deteriorating balance of payments, which may lead to a devaluation of the currency.
Learning
Memory Aids
Mnemonic
Think of a country's financial 'scales' weighing money coming IN from exports and investments against money going OUT for imports and foreign spending.
Conceptual Metaphor
NATIONAL ACCOUNTING AS HOUSEHOLD BUDGETING (a country 'balances its books' with the rest of the world).
Watch out
Common Pitfalls
Translation Traps (for Russian speakers)
- Avoid translating as 'баланс платежей' (too literal); correct term is 'платёжный баланс'.
- Do not confuse with 'trade balance' (торговый баланс), which is only one component.
Common Mistakes
- Using plural verb with it (e.g., 'The balance of payments are...' – incorrect; should be 'is...').
- Confusing it with 'balance of trade'.
- Misspelling as 'balance of payment' (missing the 's').
Practice
Quiz
Which of the following is a primary component of the balance of payments?
FAQ
Frequently Asked Questions
No. The balance of trade only covers goods (and sometimes services), while the balance of payments is a much broader record including trade, income, and financial transfers.
Yes. A balance of payments deficit means the country is paying more to other countries than it is receiving from them over a period.
Because it is based on double-entry bookkeeping. Any deficit or surplus in the current and capital accounts is automatically financed by a corresponding change in the financial account (e.g., borrowing from abroad or using reserves), making the overall sum zero.
Governments, central banks, international investors, economists, and policymakers use it to formulate trade policy, assess economic stability, and make investment decisions.
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