Balance of Payments between Bangladesh & Brazil

Presented By Md. Tanbir Alam ID # 51018044

Balance of Payment (BOP)

Balance of payments (BOP) is one of the important indicators for international trade of a country, which significantly affect the economic policies of a government. BOP is a systematic and summary record of a countrys economic and financial transactions with the rest of the world over a period of time. As defined by the International Monetary Fund, the Balance of Payment for a given period showing: a) Transaction in goods, services and income between an economy and the rest of the world. b) Changes in the economys monetary gold, special drawing rights (SDRs) and other financial claims on and liabilities to the rest of the world c) Transfers and counterpart entries that are needed to balance, in an accounting sense, any entry for the foregoing transactions and changes which are not mutually offsetting.

Balance of Payment (BOP)

When all components of the BOP sheet are included it must balance that is, it must sum to zero there can be no overall surplus or deficit. For example, if a country is importing more than it exports, its trade balance will be in deficit, but the shortfall will have to be counter balanced in other ways such as by funds earned from its foreign investments, by running down reserves or by receiving loans from other countries.

Explanatory notes on component items

The standard components incorporated in the Bangladesh BOP statement are grouped under two major categories:
I. II. A) A) Current Account Capital & Financial Account Goods & Services (B) Income (C) Current Transfers Capital Account (B) Financial Account

The current Account includes: The Capital & Financial Account includes:

Bangladesh Balance of Payment with Brazil

July-June, 2009-2010 All amounts are in million Taka
With Brazil Items Credit Debit Net

1) Current Account A) Goods & Services

a) Goods b) Services B) Income a) Compensation of employee b) Investment Income i) Direct Investment ii) Portfolio Investment iii) Others Investment

7242 4050
3210 840 205 0 205 0 0 205

25304 7590
6822 768 17454 0 17454 150 0 17304

-18062 -3540
-3612 72 -17249 0 -17249 -150 0 -17099

Bangladesh Balance of Payment with Brazil

July-June, 2009-2010 All amounts are in million Taka

With Brazil Items C) Current Transfer Credit 2987 18062 18062 0 0 16070 1092 Debit 260 192 192 0 0 192 0 Net 2727 17870 17870 0 0 15878 1092

2) Capital & Financial Account

A) Financial Account i) Direct Investment ii) Portfolio Investment iii) Others Investment iv) Reserve assets

3) Net Error & Omissions

900

900

Findings
The Balance of Payment of Bangladesh with Brazil for 2009-10 record a shortage of Tk. 18062 million on the current account. On the other hand, according to the rule of BOP, it is supposed to be inflow of Tk. 18062 million in the Capital & Financial Account, but Tk. 17870 million shows as inflow under this account and rest Tk. 900 million observed as Errors and Omissions.

Recommendations
Establish agro base industries. Trade barriers should be removed. Quality of service has to be improved. Amount of investment in any format has to be increased. Develop tourism sector. Export skilled manpower.

THANK YOU ALL