Balance of Payment of Bd

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Balance of Payment, its components and the scenario of balance of payment of Bangladesh

Balance of Payment, its components and the scenario of balance of payment of Bangladesh

Submitted to
Rahnuma Ahmed
Lecturer
BRAC Business School

Submitted by
M. Rezaur Rahman (09204024)
Tarique Imam (10104061)
Tanvir Inzamamul Hoque (10104077)
Rafiul Karim (10104080)
Jahran Ahmed (10304062)
Musad-Al-Shehab (10304100)

Date of Submission
28th November, 2012
Executive Summary
The Balance of Payments is the summary statement or statistical record of a country’s international economic transactions with the rest of the world over a certain period of time presented in the form of double-entry bookkeeping. It provides an overview of a country’s international transactions. The Balance of Payments statements as included in the publications of Bangladesh Bank have been compiled in respect of transactions with four countries: the United Kingdom, the U.S.A., Canada and Japan and several country groups viz. European Union, Other European Countries, Organization of Islamic Conference, Association of South-East Asian Nations, Other Asian Countries and Rest of the World. The main source documents for compilation of the balance of payments of Bangladesh are the records of the Authorized Dealers, supplemented by information obtained from the Bangladesh Bank and Economic Relations Division (ERD) of the Ministry of Finance. In Bangladesh Balance of Payments are recorded under three main heads: current account, capital account and financial account. As per the basic conventions in accounting, balance of payments transactions are recorded in the form of double-entry book keeping, with each credit-entry exactly balanced by an offsetting debit-entry and vice versa. A credit-entry records the provision of real resources denoting exports of goods and services and a decrease in holding of foreign financial assets or an increase in foreign financial liabilities. Conversely, a debit-entry records the provision of real resources denoting imports of goods and services and an increase in holding of foreign financial assets or a decrease in foreign financial liabilities. Unrequited transfers and counter-parts are shown as credits when the entries to which they provide the offsets are debits and as debits when those entries are credits. The net positions are arrived at by deducting debits from credits. Thus for assets, whether real or financial, a positive (credit) figure represents a decrease in holdings while a negative (debit) figure represents an increase. In contrast, for liabilities, a positive figure shows an increase and a negative figure a decrease. The overall Balance of Payments is determined through adding all the net balances of all accounts. From 1991 to 1997 in calculating current account of Balance of Payments trade balances, services balances and unrequited transfer balances are considered and after 1997 in calculating current account of Balance of Payments along with trade balances and services balances, income balances and current transfer balances are also considered. Previously only capital accounts are considered but now along with capital account, financial accounts are also considered. From 1991 to 2011 there occurred many changes, up and down in different accounts, some of which have considered as good for our country and some of which are not. In this report we have tried our best to present the changes and the impacts of them. For Balance of Payments Bangladesh Bank follows 5th edition of the classificatory scheme of the IMF's Balance of Payments Manual (BPM5). It has been being followed since 1997-98, before that 4th edition of the classificatory scheme of the IMF's Balance of Payments Manual (BPM4) was followed.

Letter of Transmittal
28th November, 2012
Rahnuma Ahmed
Lecturer,
BRAC Business School
BRAC University
66, Mohakhali,...
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