Question

Where is 'borrowings from abroad' recorded in the Balance of Payments Accounts? Give reasons.

Answer 1

Borrowings which include commercial borrowing by the government or private sector from the rest of the world and the external assistance to a nation or by a nation is called as borrowings from abroad.
Such borrowings from foreign countries or the international money market are recorded in the capital account of the Balance of Payments.
These borrowings lead to an inward flow of foreign exchange, and are, therefore, treated as positive items in the capital account of the balance of payments.