Summary information
In the Annual Report of the Bank of Guyana, readers can find a series of tables, one of which is entitled ‘Balance of Payments’. It is a table with summary information about foreign economic and financial activities that took place during the course of a given year. As simple as it looks, the data in the table tells many stories about Guyana and other countries around the world. This article seeks to tell the stories that are hidden in the numbers in the Balance of Payments (BOP). The stories include concepts about international trade, things that might incorrectly suggest misconduct by importers and exporters and the activities that influence the numbers. The attempt to reveal the stories is a risky venture because of the many complex issues that must be discussed in order to get the story out. This article therefore lives by the adage, it is better to try and fail than fail to try. The stories will be presented in a two-part series.
Conceptual problem
To appreciate the stories, one has to know what the Balance of Payments is all about and how it works. Having that information is important because many persons often think that the Balance of Payments is similar to a balance sheet that is prepared as part of the financial statements of a business. Part of this conceptual problem stems from the fact that both reports use debits and credits in arriving at the final numbers found in them. Others somehow believe that the common word balance means that the two statements serve the same purpose. Nothing could be further from the truth and people need to understand that the two
