Balance of Payment Law and Legal Definition

Balance of Payments is the difference between the funds received by a country and those paid by a country for all international transactions. The international transactions include the exchange of merchandise, exports and imports. It is commonly summarized as the balance of trade. The balance of payments, in effect, indicates the difference between currency coming into a country and that flowing out of the country. The balance of payments is divided into two accounts. Current account, which includes payments for imports, exports, services, and transfers and capital account, which includes payments for physical and financial assets.