Question

1. Balance of payment statement of a country is given below which is incomplete, find the relevant values in the boxes and interpret the statement. (5+5 Marks)

Balance of Payment statement of a country for 2020 ( Jan-April)
Item	Credit	Debit	Net
A. CURRENT ACCOUNT
I. MERCHANDISE ( Goods account)	82,729	128,941	-46,212
II. INVISIBLES ( Services Account)	77,957	46,091	31,866
III. Unilateral Transfers Account	120	120	0
B. CAPITAL ACCOUNT
1. Long Term account	88,393	69,659
2. Short term Account	52,639	43,491
Total Current Account
Total Capital Account
E. International Liquidity Account (i+ii)
i) I.M.F.	0	0	0
ii) Foreign Exchange Reserves
( Increase - / Decrease +)

Answer 1

Item	Credit	Debit	Net	interpretaion
A. CURRENT ACCOUNT
I. MERCHANDISE ( Goods account)	82,729	128,941	-46,212
II. INVISIBLES ( Services Account)	77,957	46,091	31,866
III. Unilateral Transfers Account	120	120	0
B. CAPITAL ACCOUNT
1. Long Term account	88,393	69,659	18,734	long term account is an account asset side of a company balancesheet that represent the compaany investment its company hold more than a year,long term investor willing to take more risk higher rewards,these are different from short tem investment
2. Short term Account	52,639	43,491	9148	Short term account is marketable securities highly liquidate asset,also refer holdings a company owns but intend to sell within a year
Total Current Account	160,806	175,152	-14,346	A current account deficit is usually accompanied by depletion in foreign exchange assets because those reserves would be used for investment abroad. The deficit could also signify increased foreign investment in the local market, in which case the local economy is liable to pay the foreign economy investment income in the future.
Total Capital Account	141,032	113,150	27,882	The current account is the difference between a country's savings and investments.,A country's capital account records the net change of assets and liabilities during a certain period of time.
E. International Liquidity Account (i+ii)
i) I.M.F.	108,167	131,661	-23,494	its shows the iMF account si is an overall deficit would be expansionery fiscal stance on the basis of negative impact of taxes and other revenue on aggregate demand is more less the outset of positive effect of givt spending
ii) Foreign Exchange Reserves				Foreign exchange reserves are called reserve assets in the balance of payments and are located in the capital account, and are usually an important part of the international investment position of a country
( Increase - / Decrease +)