Balance of payments. Image credit therecordingrevolution.com

Balance of payments. Image credit therecordingrevolution.com

ZIMSEC O Level Commerce Notes: Balance of Payments (B.O.P)

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.

To access more topics go to the Commerce Notes page.

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