Balance of Payments

Balance of payments (B.O.P)

• This is the difference between Zimbabwe’s total earnings (receipts) and total expenditure.
• Exported goods and services less imported goods and services.
• It is calculated for a given year.
• When the total for exports exceeds the total for imports it is known as a favourable balance.
• When the total for exporters is exceeded by the total for imports it is known as an unfavourable balance.
• A favourable balance is also known as a surplus.
• An unfavourable balance is also known as a deficit.
• For example:
• Zimbabwe, in a given year, exported goods worth $5 billion and services worth $2 billion.
• In the same year it imports goods worth $7 billion and services worth $3 billion.
• The Balance of Payments would be calculated as follows:
• BOP=exports( goods+services exported) – imports (goods + services imported)
• = (5+2) – (7+2)
• =7-9
• =$2 billion dollars deficit.

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