Question
Balance of payment always balances. Comment.
Solution
Balance of Payment always balances – How? We know from our earlier discussion that all transactions are recorded in balance of payment account in double entry system of bookkeeping. Under this system every transaction creates two equal enteries, i.e., one credit entry showing where it came from and the other debit entry showing where the same is put (spent). As a result total amount of credit (receipt) side is always equal to debit (payment) side. Thus, in accounting sense, balance of payment always balances, In operating sense also BOP is always in equilibrium because if current account is in deficit, the same is restored (compensated) with capital account. Hence overall balance of payment is always balanced.
