Assume the following information was extracted from the Balance of Payments accounts of a European Country The ministry of finance Principal Secretary has provided the following additional summaries CURRENT ACCOUNT (TRADE) CR DR BALANCE Exports 28800 Imports 41400 12600 SERVICE TRADE CR DR BALANCE Dividend income to residents 960 Tourism earning by residents 936 Interest from offshore investments 1800 3696 Interest paid on foreign debt 19080 Insurance and freight payments abroad 8550 Repatriation of profits by foreigners 21600 Travel abroad 1500 Interest paid to foreigners 10800 (64530) Service trade balance (10755) Service and trade balance (73434) TRANSFER PAYMENTS CR DR BALANCE Donor aid to residents 1170 Private grants to residents 258 1428 Govnt donations to foreigners 210 Private gifts to foreigners 180 (390) Transfers payment balance 1038 Current a c balance (72396) CAPITAL ACCOUNT CR DR BALANCE LONG TERM CAPITAL Foreign long term investment in the country 4578 Sale of government bonds to foreigners 4800 9178 Private long term offshore investment (5340) Long term capital balance 4038 SHORT TERM CAPITAL Deposits in local banks 930 Deposits in foreign banks 2400 Short term capital balance (1470) Errors and omissions (1290) Capital a c balance 1278 Overall balance of payments (71118) OFFICIAL SETTLEMENTS A C CR DR BALANCE Liabilities to foreign official holders Use of the credit tranche 2400 Official reserves Use of SDRs Total 2040 Use of convertible currencies Gold 66679 Official settlements a c balance 71118 Required The Countrys Principal Secretary has requested you to ascertain whether or not The Balance of Payments (BoP) entries in the summary are correct and to make any necessary corrections (5 Points) The principal secretary has requested you to analyze and present a report on the BoPs financial implications to the country Your report should be supported by financial data from the BoP statement ( 10 Points) What is the countrys current BoP position, and what are its implications on the country (5 Points )

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Posted on Aug 07, 2024

Assume the following information was extracted from the Balance of Payments accounts of a European Country.

The ministry of finance Principal Secretary has provided the following additional summaries

CURRENT ACCOUNT (TRADE)	CR	DR	BALANCE
Exports		28800
Imports	41400		+12600
SERVICE TRADE	CR	DR	BALANCE
Dividend income to residents		960
Tourism earning by residents	936
Interest from offshore investments	1800		+3696
Interest paid on foreign debt		19080
Insurance and freight payments abroad		8550
Repatriation of profits by foreigners		21600
Travel abroad		1500
Interest paid to foreigners		10800	(64530)
Service trade balance			(10755)
Service and trade balance			(73434)
TRANSFER PAYMENTS	CR	DR	BALANCE
Donor aid to residents	1170
Private grants to residents	258		+1428
Govnt donations to foreigners		210
Private gifts to foreigners		180	(390)
Transfers payment balance			+1038
Current a/c balance			(72396)
CAPITAL ACCOUNT	CR	DR	BALANCE
LONG TERM CAPITAL
Foreign long term investment in the country		4578
Sale of government bonds to foreigners	4800		+9178
Private long term offshore investment			(5340)
Long term capital balance			+4038
SHORT TERM CAPITAL
Deposits in local banks	930
Deposits in foreign banks	2400
Short term capital balance			(1470)
Errors and omissions			(1290)
Capital a/c balance			+1278
Overall balance of payments			(71118)
OFFICIAL SETTLEMENTS A/C	CR	DR	BALANCE
Liabilities to foreign official holders
Use of the credit tranche	+2400
Official reserves
Use of SDRs
Total	+2040
Use of convertible currencies/Gold			+66679
Official settlements a/c balance			+71118

Required

The Countrys Principal Secretary has requested you to ascertain whether or not The Balance of Payments (BoP) entries in the summary are correct and to make any necessary corrections (5 Points)
The principal secretary has requested you to analyze and present a report on the BoPs financial implications to the country. Your report should be supported by financial data from the BoP statement (10 Points)
What is the countrys current BoP position, and what are its implications on the country? (5 Points)