Balance of payments always balances. Does it mean a situation of zero net financial obligation for a country? (2024)

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It is only in the accounting sense that balance of payment always balances. From a practical point of view, it should not be interpreted as a situation of zero net financial obligation for a country. A negative balance on the current account is equated with a positive balance in the capital account. But the positive balance in the capital account may have been achieved through loans from the rest of the world. All loans are financial obligations to the rest of the world.


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