News Room

During the month of April, government usually presents the national budget. This is a highly anticipated event for many Saint Lucians as it outlines the areas, which the government has earmarked for expenditure and development. The term defined this week is critical to the budget as it can affect the amount of money government has available to it for expenditure. This week’s term is Balance of Payments

Balance of Payments is an accounting record of all monetary transactions between a country and the rest of the world. These include payments for that country’s exports and imports of goods, services and financial capital as well as financial payments. A country’s Balance of Payments must always zero out, i.e. imports must equal exports. However, in many developing countries like ours, the import bill usually exceeds the export bill. Therefore, we experience a negative Balance of Payments. To address this, we must then look for ways to cover the excess expenditure. Economists have devised a number of ways to correct balance of payments deficits.

What does this mean for you?

Positive Balance of Payments which is more money coming in from exports than going out from imports means that there is more money available for such things as social security and infrastructural development. In addition, a consistently positive Balance of Payments could mean that a country is experiencing significant foreign investment, which can result in the creation of jobs and investment opportunities for locals.