The balance of payments is a record of all operations carried out between a specific country and the rest of the world’s countries in a certain period of time.

Composition of the balance of payments

The balance of payments (BP) is divided into three basic accounts:

• Current account.

It is formed by the following documents:

1. Trade balance, where imports and exports of goods from the country are recorded.
2. Services balance, in which services performed by residents of one country to another are recorded.
3. Income balance, collects payments that a country makes to productive factors such as labor and capital, but that do not reside in the country.
4. Current transfers balance, in which operations that a country performs with another without any consideration in between are recorded.

• Capital account.

It is composed of two accounts:

1. Capital transfer, are operations of transfer of fixed capital or money without consideration.
2. Acquisition and disposition of non-produced intangible assets.

• Financial account.

The variations of the country’s financial assets and liabilities with another country are accounted for in this account. It is composed of the following items:

1. Direct investments.
2. Portfolio investments.
3. Other investments.
4. Derivative financial instruments.
5. Variation of reserve assets.

There is another account, which although it is not included among the basic accounts has great utility. We refer to the Errors and omissions account. This account includes what is known as indeterminate capital and is used for corrections. It is an adjustment account.

Balance of payments in Spain

In Spain, the Royal Decree of the Ministry for Public Administrations 1651/1991, of November 8, entrusted the Bank of Spain with the preparation of the Balance of Payments. Said preparation will be carried out according to the standards established in the Sixth Balance of Payments and International Investment Position Manual of the International Monetary Fund (BPM6), which entered into force in Europe in 2014.

We hope this information is very useful to you.