Balance of Payments Question (1 Viewer)

[Ilikeapples]

Could anyone explain why a dividend is not recorded on the financial account and what it means when transactions in the current account are 'short-term' in nature, and what makes a dividend 'short-term'?

 

[phat_tar]

A dividend is like a servicing cost so it goes in the NPI, the financial account only records investments e.g. portfolio/direct. A dividend is inherently short term because its a payment, an investment will sit in a foreign country for a while before being repatriated later when the asset is sold .