The Balance of Payments is a financial statement that summarizes all economic transactions between a country and the rest of the world over a specific period. It includes trade in goods and services, investments, and transfers. A positive balance indicates that a country exports more than it imports, while a negative balance shows the opposite. This balance is divided into two main accounts: the current account, which tracks trade and income, and the capital account, which records investments and loans. Understanding the Balance of Payments helps governments and economists assess a country's economic health and make informed policy decisions.