For practical and analytical purposes, the most important part of the balance of payments is the current account balance.
The current account balance is a key concept of the international economy, showing, on the one hand, the result of the country’s interaction with the rest of the world over a certain period of time, and on the other hand, the balance of domestic investments and savings.
Current accounts of the balance of payments consist of four main groups: transactions with goods, services, income flows and current transfers.
Goods
Under this item of the current account of the balance of payments, mainly exports and imports of goods are recorded.
Goods – a group of items of the balance of payments, summing up on the basis of fobs at market prices the export and import of ordinary goods, goods for further processing, repair of goods, purchase of goods in ports by transport organizations and non-monetary gold.
Export and import, with some exceptions, is considered to be the transfer of ownership of goods from residents to non-residents and, conversely, from non-residents to residents. Goods for further processing include goods that are first exported (e.g. crude oil), processed abroad and then re-imported as a ready-to-consume product (gasoline). Recycling is considered a process as a result of which the product undergoes significant physical changes (for example, sewing suits from fabric). If the physical changes are minor (adding branded labels to the finished costumes), then the process is not considered recycling, but the provision of a service.
The article of repair of goods covers the repair of mobile equipment, such as ships and aircraft, which is carried out by a resident for a non-resident and vice versa. This article shows only the cost of the repair work itself, and not the cost of the goods before and after its repair. The item on goods purchased at ports by transport organizations covers goods such as fuel and food purchased by ship crews abroad at ports of call or intermediate landing. The item of non-monetary gold covers the export and import of any gold, with the exception of monetary gold, which refers to foreign exchange reserves.
Ownership of an export is considered to pass from the buyer to the seller when the seller ceases to record it on its financial balance sheet. In practice, however, the moment of transfer of ownership is recorded by the customs authorities simultaneously with the crossing of the state border by the goods. Ownership may not be transferred if the goods are sold by one division of the firm to another located abroad, if the goods are handed over for financial leasing, and also in the case when the goods are provided for processing without transferring ownership. However, in these cases, transactions relate to the item of goods of the current account of the balance of payments. Goods that do not cross the border must be included in its export or import if ownership of them has passed from a resident to a non-resident. Among them are goods whose location is not rigidly tied to any territory: ships and aircraft, railway rolling stock, installations for drilling oil wells, seafood directly sold from ships abroad, etc.
Goods that cross the border of the country, but do not change ownership, with the exception of intra-company trade and financial leasing, are not considered its export or import. Among them are goods of direct transit trade, return of import or export goods, goods sent to diplomatic missions, exhibition exhibits not intended for sale, samples of goods that are not of commercial value.