1. An overall statement of a country’s economic transactions with the rest of the world over some period, often a year. A table of the balance of payments shows amounts received from the rest of the world and amounts spent abroad. The current account includes exports and imports, that is, visible trade, and receipts from spending abroad on services such as tourism. It also includes receipts of property incomes from abroad and remittances of property incomes abroad, and receipts and payments of international transfers, that is, gifts. The capital account of the balance of payments includes inward and outward foreign direct investment, and sales and purchases of foreign securities by residents and of domestic securities by non-residents. The third element in the balance of payments is changes in official foreign exchange reserves. See also financial account.

2. The difference between total receipts and expenditure in any category of payments. Overall payments, including changes in foreign exchange reserves, must balance by definition, but this is not true for any one category of payments. The balance of payments on current account is the difference between total receipts and expenditures on current account: if receipts exceed spending, there is a current account surplus, and if spending exceeds receipts there is a current account deficit. The balance of payments on capital account is the difference between receipts and expenditures on capital transactions with the rest of the world. Receipts come from the sale of securities or real capital assets to non-residents; expenditures are on loans to non-residents or purchase of real assets abroad. Changes in foreign exchange reserves are equal to the sum of the current and capital account surpluses. A balance-of-payments problem or crisis means that the balance-of-payments situation is not sustainable. This may be because foreign exchange reserves are being run down, or because they are being maintained, but only by borrowing abroad at a rate that cannot continue for long before foreign lenders become too worried about the safety of their loans to provide any more. A balance-of-payments crisis differs from a problem only in the speed at which exhaustion of exchange reserves or borrowing capacity is approaching: a problem calls for action at some time, a crisis for immediate action.