Definition of Balance of Payments

The Balance of payments is a document accounting in which the commercial operations of services and movements of capital that are carried out by the residents of a country with respect to the rest of the world and for a stipulated time, generally one year.
This document provides detailed information on all transactions carried out between residents and non-residents of the country in question.

The different transactions that are recorded in the balance of payments are grouped into different sub-balances depending on the character that have the same, while the difference between payments of a sub-balance and the income is designated as balance Of the same; on the other hand, the final balance will be ultimately subject to the exchange rate governing the country in question.
In a clean float scenario, the balance of payments will be balanced, that is, with a balance in zero, but on the contrary, in the case of economies that have a fixed exchange rate, the balance will be equivalent to the change in net reserves of the central bank.

Both its structure and the guidelines for its preparation are provided in the Fifth Handbook of Payment balances of the International Monetary Fund (IMF). Current account, capital account, account financial and errors and omissions account turn out to be the four subdivisions of the balance of payment.