Balance of international pembayara (BALANCE OF PAYMENT)

Balance of Payment Balance of payment (Bop) or the balance of payments (N / P) record all tansaksi a country with other countries, which include the international transactions of a country at a certain period, usually one year. Bop has two main components, namely: 1. Current account (current account), consisting of import and export transactions of goods and services. In the current account, exports are recorded as a credit for producing foreign exchange. While imports are recorded as a debit because the "remove" / out of the country foreign exchange. In addition to exports and imports, other transactions are included in the current account is the payment factor (factor payment), and unilateral transfers. 2. Financial account (formerly called the capital account), which records transactions of financial assets, transfer payments, debt and international debt. This will include recording of FDI (foreign direct investment or foreign investment / PMA), payment of dividends, debt repayment, interest or debt, the purchase of securities, stocks, and so forth. Financial measures the foreign exchange accounts in and out as the current account, where transactions that generate foreign exchange, recorded as a loan (capital inflow). In contrast, foreign exchange transactions that resulted out of a country are recorded as debit (capital outflow). Examples of transactions that generate foreign exchange (credit) on the financial account: the foreign debt, FDI, the purchase of shares or bonds in the country by foreign investors, etc. All of these transactions bring foreign exchange for the country. Such as transactions take place between the Indonesia-United States, the dollar reserves (foreign exchange) Indonesia will increase as a result of the above transactions. While examples of reducing foreign exchange transactions (debit) to the financial account are: the repayment of foreign debt, interest payments on foreign debt, payment of dividends on shares of domestic-owned by foreign investors, interest payments and debt maturity bonds, sending the profits from FDI or foreign investment invested in the country, etc. All this reduces the foreign exchange transactions of a country. Two main features are financial accounts: 1. Capital inflow. This is a fund / capital into a country (recorded as a credit), for example through foreign direct investment (FDI), purchase stocks, bonds, or other securities. Capital inflow which contributes both to the economy is that in the long run, for example through real capital investment (FDI) in the form of factory building, purchase of new machinery, etc. While short-term capital inflow is often also called "hot money", is a fund that just drop in a country and does not contribute directly to an increase in output (GDP). Hot money is usually only for short-term gains, such as the purchase of shares. 2. capital outflow. This is a fund / capital out of a country (recorded as a debit), for example, there are private / public investments (both FDI and the purchase of shares and other securities) in foreign countries, the repayment of foreign debt, interest payments on external debt country, etc. In an economy, theoretically deficit or surplus in the account one above will be covered by the surplus / deficit on the other account. Thus, Bop to reach equilibrium conditions / balanced / zero. impor) maupun negatif (defisit atau ekspor should be noted that this equilibrium can be achieved either when a positive net exports (or export surplus> imports) or negative (a deficit or exports Y." onmouseout="this.style.backgroundColor='#fff'">Based on these equations, the country experienced a deficit in X (or deficit on current account) if the domestic demand> domestic output, or C + I + G> Y. Conversely, a country experiencing a surplus in X if domestic demand Theoretically, if the current account deficit, which means imports> exports, then the state must seek foreign exchange or capital inflow to cover these shortages. As explained above, this inflow of capital can be obtained through FDI, the sale of stocks or bonds, or other asset sales to foreign countries. Thus, the state can obtain foreign exchange to pay for imports exceeding exports (because of foreign exchange resulting from exports are insufficient to pay for imports are larger). This will increase (credit) in the financial account, resulting in a surplus of deficit on current account. The result (theoretically), Bop will remain zero (equilibrium). Conversely, when the current account surplus, the country has a surplus of foreign exchange. This can be a foreign exchange reserves (to cover the deficit in the future), invested or loaned to other countries. Theoretically, this will reduce (debit) to financial accounts, resulting in a deficit of surplus that occurs in current accounts, so Bop will remain zero (equilibrium). Deficits and the Current Account Surplus The current account deficit is not necessarily bad, and vice versa, the surplus is also not always mean better. In the old days, economic experts and the state always maintains a surplus condition and called it a "favorable condition", while the deficit condition referred to as "unfavorable condition". Until now the mercantilist still believe about it. But economists now think another. Things to note here is the cause of the deficit or surplus. There are several conditions that may be experienced when the state of his current account deficit: Consumption exceeds the amount that can be produced. This condition in the long run will harm the economy because the deficit tends to be covered with foreign debt or the sale of overseas assets, which would require "payment" will be the future. The decline in "competitive advantage" the product of a country in another country. This is usually caused by a more expensive price. Prices are more expensive domestic products less attractive to consumers in other countries. This is especially often associated with the exchange rate. Exchange rate that is too strong will result in the price of the product of a country becomes relatively expensive in foreign countries, so that overseas consumers become reluctant to buy. According to experts, there are several reasons why the conditions of current account deficit need not worry: If current account deficits financed by long-term capital inflow, then this can be beneficial for the economy because it will increase production capacity in the country. In the globalization era like today, seeking funds to finance the deficit is not difficult. If the deficit is too large, it will lead to devaluation of the currency so it can help reduce the deficit. When there is a devaluation, the price of a country's exports will be relatively cheaper for consumers in other countries, so that export demand will increase. In contrast, the price of imported products will be relatively more expensive in the country, so the demand for imported products will decrease. But there are also reasons why we need to worry about the condition of the current account deficit: 1. Deficit in the long term need to watch out because it requires continuous funding. Funding is usually in the form of loans from abroad (thus there is a surplus in the financial accounts), which of course must be returned in the future. According http://www.economicshelp.org/2007/03/does-current-account-deficit-matter.html dati sources, if the deficit exceeds 6% of GDP, it would be dangerous if the country depends on the flow of funds from outside (capital inflow). 2. Many countries are not able to borrow large amounts at low interest rates, especially if there is no trust from the international world. If this happens, then the state would have to raise rates in order to attract funds from foreign investors, which would also cause new problems for macroeconomic conditions in the country. 3. The deficit is too large can be a sign of imbalance in the economic, structural weaknesses, and the production sectors that are not 'competitive'. This usually resulted in the production exceeds consumption, necessitating imports for the shortfall. In addition, foreign borrowing by the government can also increase aggregate demand, so demand for increased consumption of imports come. 4. The current account deficit is likely to raise foreign debt. In the long run, deficits that at first occurred only in the current account could affect the financial accounts for these foreign loans will require the payment of interest and loan repayment. Another example is the sale of shares to foreign countries to obtain foreign exchange for current account deficit, one would have to pay the dividend. Similarly, sales of overseas bonds, a time will require payment of interest and the face value (face value) of bonds. Deficit and surplus in BOP (disequilibrium) Although theoretically Bop must be at zero (equilibrium), but in reality this is often not achieved. There are three types and causes of disequilibrium in Bop: 1. Cyclical disequilibrium. There are two things that can cause this. First, the business cycle / economic differ between countries. Second, countries have the income elasticity of demand (income elasticity of demand) and / or the price elasticity of demand (price elastisity of demand) are different. 2. Secular disequilibrium. Is a long-term disequilibrium in the Bop, due to the profound economic changes during the period of time long enough. These economic changes are usually caused by phase transitions from one growth stage to another stage. tabungan domestik, dan impor > ekspor." onmouseout="this.style.backgroundColor='#fff'">Countries at the stage of growth of domestic investment tends to make> domestic savings, and imports> exports. Bop deficit occurred here because there are no surplus funds to cover imports. 3. Structural disequilibrium. This is divided into two: Disequilibrium at the level of goods and services. Occurs when changes in demand or supply for export or import of changing conditions existing equilibrium. Can also occur when the income was spent outside the country. Disequilibrium at the level factor (price factor). Occurs when the price factor (eg labor) are not in accordance with the factor endowment conditions in a country. For example, if labor costs are too high, then the company will likely seek other countries to produce, of course, the cost of labor is cheaper. Or, will import the goods / services that require a lot of labor if produced domestically will be multiplied. This will result in deficits in the Bop and unemployment in the country. Policies to Reduce Deficit Bop Devaluation, ie by lowering the exchange rate. Decrease in the exchange rate means the price of export goods will be cheaper for foreign consumers (due to our weakening exchange rate), and instead the price of imported goods would become expensive for domestic consumers. This will encourage exports and reduce imports, which in turn can improve the deficit in the Bop. Deflation, ie by lowering the general price level (deflation occurs when the inflation rate was minus). With the aim to reduce aggregate demand, the government will raise taxes or interest rates. Rising taxes will erode purchasing power, while naikknya interest rates will encourage people to save money (so that consumption decreases). As consumption decreases, imports are expected to come down and reduce the deficit. However, this policy depends on the elasticity of demand for imported goods. It also may conflict with other macroeconomic policies that could hinder economic growth and increase unemployment. Supply-side policies, ie from the supply-side policies in an economy. The trick is to manipulate the supply side (production) so that in the long term will improve the economy and exports kekompetitfan country. Protectionism. For example by raising tariffs / duties, impose quotas, strict import requirements, import content requirements, etc. The point is to protect domestic industries. Negative impact, this policy could hinder domestic production so that the potential exports go down. In addition, the local industry may become less competitive because it is protected. Entry Filed under: http://yasinta.wordpress.com/2008/07/22/neraca-pembayaran-internasional-balance-of-payment/.