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Question
Giving reasons explain where charity to foreign countries is recorded in the Balance of Payments Accounts
Solution
Unilateral transfers are known as transfers for free such as gifts and grants from foreign governments. Hence, charities to foreign countries are unilateral transfer payments. When a country provides grants or donations to the rest of the country, it leads to an outward flow of foreign exchange and is treated as negative items in the current account of the balance of payments.
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