See also: Balance

The balances current is the balance of monetary flows of a country resulting from the international exchanges of goods and services (commercial Balance), incomes and transfers current. The current balance is one of the components of the Balance of the payments.

One also speaks about balances current operations , of balances current payments or of balance of the current operations . The associated account is the account of the current operations or account running (Canadian term).

Concretely, a positive current balance makes it possible the country to refund its Dette or to lend to other countries. A negative balance (= a deficit running ) must be compensated by negociating loans near external agents or by liquidating external credits.

Save, investment and balances current

The current balance ($BC$) is the balance of the international exchanges, exports ($X$) less imports ($M$): $BC\; =\; X\; -\; M\; \backslash ,$, exports and imports being both measured in the national currency and evaluated at the price net of tax (the price of the added-value).

GDP ($Y$) can be defined in the following way (consumption, the investment and the variation of stocks are respectively noted $C$, $I$ and $VarSt$):

$Y\; =\; C\; +\; I\; +\; VarSt\; +\; (X\; -\; M)\; \backslash ,$,

With fixed stocks:

$Y\; =\; C\; +\; I\; +\; X\; -\; M\; \backslash ,$

The saving ($S$) is the share of the not consumed $Y$ production. One thus has:

$S\; =\; Y\; -\; C\; \backslash ,$

What is equivalent to:

$Y\; =\; S\; +\; C\; \backslash ,$

Now let us take the two decompositions of $Y$:

$S\; +\; C\; =\; C\; +\; I\; +\; X\; -\; M\; \backslash ,$

One arrives at:

$S\; -\; I\; =\; X\; -\; M\; =\; BC\; \backslash ,$

I.e., by countable construction, the current balance is equal to the difference between saving and investment.

A positive current balance thus states that the country is investor Net abroad, while a negative balance indicates that the foreigner is investor Net in the country.

In addition, if one distinguishes the private saving (noted $S\_\; \{priv\}$) from the public saving (it is the public balance $S\_\; \{pub\}$, generally negative):

$BC\; =\; S\_\; \{priv\}\; -\; I\; +\; S\_\; \{pub\}\; \backslash ,$.

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