Balance of payments (B.O.P)

Balance of payments (B.O.P) refers  to the  difference   between  the  country’s   total  receipts  from  exports   and  total  expenditure on imports  in a given time.

If the country’s   receipts (revenue) from exports exceed her expenditure   on imports, the country is said to have a balance of payment surplus and therefore   it experiences   favourable   balance   of payment.

If the country’s   expenditure   on imports exceeds  her receipts  from  exports,  the  country   is said to have  balance of payment  deficit and therefore  it experiences  unfavorable   balance  of payment.