Question

How is BoP deficit or BoP surplus estimated?

Answer 1

BoP deficit (or surplus) is estimated in terms of an overall BoP balance. It is calculated by combining the balance (related to current account BoP and capital account BoP). Also, errors and omissions (indicating statistical discrepancies) are taken account of. Thus, the overall balance (deficit or surplus) is estimated by specifying the following equation.

Overall Balance = Current account balance + Capital account balance + Errors and omissions

In case overall balance is found to be positive, it is called BoP surplus.

In case it is found to be negative, it is called BoP deficit.