Balance of Payments
Plain definition
A country's accounting record of all economic transactions with the rest of the world over a period. It has three main parts: the current account (trade, services, income), the capital account, and the financial account. By double-entry bookkeeping, the overall balance always sums to zero.
In economics
A current-account deficit must be financed by a financial-account surplus (foreign investment inflows or reserve drawdowns). Persistent 'twin deficits' -- fiscal plus current-account -- signal dependence on foreign savings. The balance of payments is the framework behind every trade-deficit headline.
Example
The US runs a large current-account deficit financed by foreigners buying US stocks, bonds, and real estate -- the financial-account surplus that balances the books.
People read 'balance of payments deficit' as if the whole thing can be in deficit. Because it is double-entry, the overall balance of payments always balances; what is in deficit or surplus is a specific account, usually the current account.