1) Compute the overall balance in 2017, contrasting with 2012 and discuss its significance...

It is said in the model answer that when the overall Balance of Payment is in deficit or surplus, it is significant; however, what if the country's overall Balance of Payment is 0 (Balanced?)? Is it still significant?

For example, an overall BOP deficit can be supported by drawing down the central bank's reserve holdings. Likewise, an overal BOP surplus can be absorbed by adding it to the central bank's reserve holdings.

How does a country engage in the official reserve transaction if the overall BOP is 0 (balanced)? What can be done from the central bank's reserve holdings if the overall BOP is 0 (balanced)?

2005 -740 13 687 2006 -798 2 807 2007 -713 0 617 Balance Current Account Balance Capital Account Balance Financial Account Balance Net Errors and Omissions Official Reserves Account Source: Balance of Payments Statistics Yearbook: 2013, International Monetary Fund, December 2013 2008 2009 2010 2011 2012 -440 681 382 -449 -458 735 283 440 568 26 151 93 0 52 2 16 2005 -740 13 687 2006 -798 2 807 2007 -713 0 617 Balance Current Account Balance Capital Account Balance Financial Account Balance Net Errors and Omissions Official Reserves Account Source: Balance of Payments Statistics Yearbook: 2013, International Monetary Fund, December 2013 2008 2009 2010 2011 2012 -440 681 382 -449 -458 735 283 440 568 26 151 93 0 52 2 16