II Essence of Balance of Payments

  Paying balance - a statistical report, where in a systematic form provides summary information on foreign operations of the country with other countries for a certain period of time." Balance of payments is an important indicator and tool to predict the degree of possible participation of countries in world trade, international economic relations, to establish its solvency. The peculiarity of this concept is that the original and the modern definition of the term have fundamental differences that are often misleading. The term "balance of payments" was first used by James Stuart Denham in his work "Studies on Principles of Political Economy (1767) (Inquiry into the Principles of Political Economy). Stewart defines the balance of payments as an independent concept, which consists of:

   Costs citizens abroad.

   Payment of the debts, the debt principal and interest to foreigners.

   Provision of loans to other countries.

   Thus, the original balance of payments reflect only the committed payments, but not all foreign trade operations with material, financial and intellectual assets (foreign trade operations - a transaction between residents and nonresidents).

   At the same time it must be noted that the conceptual framework, the logic and structure of a modern balance of payments is based on previous submissions about the purpose of balance of payments.

   In drawing up the balance of payments is using the accounting principle of double entry. Each operation is reflected in the debit and credit accounts and debit the total amount must equal the final amount of the loan. Debit amounts are formed as a result of exports of goods and services and capital inflows, leading to foreign exchange earnings on the account, they are recorded with a plus sign. Credit amounts are formed as a result of imports of goods and services and capital outflows, leading to consumption of foreign currency. These are recorded with a minus sign. In the balance of payments, economic transactions are recorded at market prices, ie prices at which actual exchange took place economic values.

Types of representation and balance of payments

   When publishing the balance of payments can be submitted in a "neutral" or "analytical" form. In a "neutral" form of goods, services and current transfers combined current account and capital transfers, direct investment, portfolio investment, financial derivatives, other investment and reserve assets - in the capital account and financial instruments. To ensure equality between the accounts, adding a balancing item "net errors and omissions" and displays the total zero balance.

   "Neutral" presentation of a number of disadvantages, in particular, it vanishes the combined effect of economic and other residents of the country's communication with the outside world, but it is impossible to determine whether the figures of independent significance or whether they are derivatives of wires included there for the sake of principle double entry.

   In this regard, along with "neutral representation of the IMF recommends to be an alternate version of the balance of payments, which is based on a reclassification and regrouping of the available information so that possible to separate primary, autonomous operation of the secondary, balancing accounts. This variant (analytical presentation) already involves removal of active or passive balance of payments, which should be defined as the total result of independent, autonomous operations, current and capital nature, independently conducted by residents and nonresidents in their relations with each other, and thus indicates the direction of foreign economic activity of the country. All other operations, in particular with the official authorities are regarded as balancing funding operations or the use of surplus, indicating the methods and sources of its settlement.

   Balance by major object is called balance of payments and, when it is positive, speak of "a strong balance of payments, when it is negative - about the" weak balance of payments.

   Historically, there are several approaches to what exactly the operation to provide a "balancing". According to the recommendations of the IMF, the balancing items include: operation of official monetary authority in foreign exchange reserves (gold, foreign currency reserve position in IMF and SDR), modify the obligations of official foreign exchange authorities to foreign official institutions, including international organizations, allocation of SDRs.