Question

Calculate trade, current account, financial account, and overall balances from the Balance of Payments of Argentina...

Calculate trade, current account, financial account, and overall balances from the Balance of Payments of Argentina in 1999 and 2000. Please answer the following questions: What seems to have been the primary driver of the current account in 1999 and 2000? Argentina’s BOP was clearly deteriorating during this period. What would it forecast to happen to the country’s currency board regime?

1999

2000

A. CURRENT ACCOUNT

GOODS EXPORTS: CREDIT

23309

26341

GOODS IMPORTS: DEBIT

24103

23889

Trade Balance

SERVICES: CREDIT

4719

4936

SERVICES: DEBIT

8830

9219

Balance on Service Trade

INCOME: CREDIT

6075

7420

INCOME: DEBIT

13566

14968

Balance on Income

CURRENT TRANSFERS : CRE

790

792

CURRENT TRANSFERS: DEB

337

393

Balance on current transfers

B. CAPITAL ACCOUNT

149

106

C. FINANCIAL ACCOUNT

DIRECT INVESTMENT: ASSETS

1730

901

DIR. INVEST. : LIABILITIES

23988

10418

PORTFOLIO INVESTMENT ASSETS

2005

1252

PORTFOLIO INVESTMENT LIAB.

-4780

-1331

OTHER INVESTMENT ASSETS

2862

1368

OTHER INVESTMENT LIAB.

1838

2287

D. NET ERRORS AND OMISSIONS

-642

-154

Overall Balance

E. Reserves and Related Items

-2013

+1176

Homework Answers

Answer #1

answer :

  • the primary driver of the current account in 1999 and 2000 is : Balance on services trade . it is negative because the debt of income on balance on service tarde is greater than its credit . This leads to deficit in current account.
  • Argentina’s BOP was clearly deteriorating during this period. It would lead to devaluation of the country’s currency as compare to the foreign currency. due to the deteriorating BOP the value of currency will also decrease in the international market.
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