| Course | BUS 553 Global Corporate Finance |
|---|---|
| Module | Module 2 |
| Paper type | Balance of payments analysis |
| Length | About 1,063 words, 6 pages |
| Format | APA 7 student paper |
| School | Aspen University |
| Program | MBA |
| Updated | October 2026 |
Free sample paper for BUS 553 Module 2
When a Customer Has Pounds but No Dollars: The Balance of Payments and an Irrigation Equipment Maker's Egyptian Receivables
Student Name
MBA Program, Aspen University
BUS 553: Global Corporate Finance
Instructor Name
Month Day, Year
When a Customer Has Pounds but No Dollars: The Balance of Payments and an Irrigation Equipment Maker's Egyptian Receivables
Platte River Irrigation, a composite manufacturer in Columbus, Nebraska, makes center-pivot irrigation systems, long steel structures that rotate around a central pivot to water circular fields. Egypt, where farmers are expanding cultivation into desert land west of the Nile, became one of its fastest-growing markets. By late 2023, however, Platte River's Egyptian distributor owed it $4.6 million in overdue invoices. The distributor was solvent and its customers had paid in Egyptian pounds; the problem was that Egyptian banks could not supply enough dollars. This paper uses the balance of payments to explain how a country's external accounts produced a company's collection problem, and what the company did about it.
The Accounts
The balance of payments records all economic transactions between a country's residents and the rest of the world over a period. Its structure is set out in the IMF's sixth-edition manual (International Monetary Fund, 2009). The current account records trade in goods and services, primary income such as interest and dividends, and secondary income such as remittances. The capital account records certain capital transfers and nonproduced assets. The financial account records transactions in financial assets and liabilities, including direct investment, portfolio investment, other investment such as loans and changes in the central bank's reserve assets. Because every transaction has two sides, the accounts sum to zero apart from errors: a current account deficit must be matched by net borrowing or net sales of assets recorded in the financial account.
Reading the U.S. Accounts
The United States runs a large current account deficit. Federal statisticians reported a deficit of $1.13 trillion in 2024, equal to 3.9% of gross domestic product, up from 3.3% in 2023 (U.S. Bureau of Economic Analysis, 2025). That deficit was financed by foreign purchases of U.S. assets, such as Treasury securities, corporate bonds and equities, and by foreign direct investment, all recorded in the financial account. The United States can sustain such borrowing in part because its currency is the world's main reserve currency and its assets are in high demand.
How Imbalances Adjust
Obstfeld and Rogoff (2005) analyzed the large global current account imbalances of the early 2000s and argued that reducing them would require shifts in spending between countries and substantial changes in real exchange rates, with the size of the required adjustment depending on how quickly it happened. Countries that cannot attract enough foreign financing to cover a current account deficit must adjust more abruptly, through currency depreciation, reduced imports or official support.
From Egypt's Accounts to Platte River's Invoices
Egypt illustrates the abrupt case. For years it ran current account deficits financed partly by portfolio inflows into government debt, tourism and Suez Canal revenue, and remittances. When global interest rates rose in 2022 and investors withdrew funds from emerging markets, financing dried up. Egypt's central bank defended an official exchange rate, rationing dollars to importers. A gap opened between the official rate and the rate in the parallel market, and a backlog of import payments built up at banks. Platte River's distributor had pounds from its farmer customers but stood in line at its bank for dollars that did not arrive. The country's financial account shortfall had become the company's overdue receivable.
The 2024 Reforms
In March 2024, Egypt moved to unify its exchange rate and allow it to be determined more flexibly by the market, tightened monetary and fiscal policy and cleared the foreign exchange backlog. The IMF's Executive Board completed reviews of its program with Egypt and approved an augmentation that brought the arrangement to about $8 billion (International Monetary Fund, 2024), alongside large investment inflows announced that year. With the backlog cleared, the distributor obtained dollars and paid most of what it owed by mid-2024, though the devaluation sharply raised the pound price of new irrigation systems for Egyptian farmers.
Warning Signs Platte River Missed
In hindsight, Egypt's accounts showed stress well before the distributor fell behind. Foreign holdings of Egyptian government debt fell sharply in 2022, reserves declined, and banks began requiring importers to wait for foreign currency. Business newspapers reported a widening gap between the official and parallel exchange rates. Platte River's credit team watched the distributor's financial statements, which remained healthy, but not the country's external position. The distributor's strength turned out to be irrelevant to whether dollars could leave the country.
What Platte River Changed
The episode led Platte River to change how it sells in countries with balance of payments pressure. It now requires confirmed letters of credit, under which a U.S. or international bank guarantees payment, for orders from countries whose central banks restrict access to foreign currency. It buys export credit insurance covering political and transfer risk, including the inability to convert local currency into dollars. It ships in smaller lots with shorter payment terms, limiting the amount at risk. And its treasurer monitors indicators of balance of payments stress, such as gaps between official and parallel exchange rates, falling reserves and import backlogs, as early warnings.
Why the Pound Price Matters Too
Even after the backlog cleared, the devaluation changed Platte River's market. An irrigation system priced at the same dollar amount now cost Egyptian farmers far more in pounds, and some postponed purchases. Platte River responded by offering smaller systems and partnering with an Egyptian bank on dollar-linked financing for larger farms. The episode showed both kinds of risk an exporter faces: transfer risk, the inability to convert local currency into dollars, and economic risk, the effect of a weaker currency on customers' ability to buy.
Lessons for Exporters
A customer's ability to pay depends not only on its own finances but on its country's access to foreign currency. The balance of payments shows where that access comes from and how it can disappear when financing dries up. Exporters to countries with large deficits financed by volatile flows should price that risk and protect against it before, not after, payments stop.
Conclusion
The balance of payments is an accounting identity with practical consequences. Egypt's reliance on financing that reversed in 2022 led to dollar rationing, which turned a solvent customer's payments into a $4.6 million collection problem for a Nebraska manufacturer. Understanding the accounts and watching their warning signs allows exporters to choose payment terms that protect them when a country's external financing falters.
References
International Monetary Fund. (2009). Balance of payments and international investment position manual (6th ed.). International Monetary Fund.
International Monetary Fund. (2024, March 29). IMF Executive Board completes the first and second reviews of Extended Fund Facility arrangement for Egypt, approves augmentation of the arrangement (Press Release No. 24/101). https://www.imf.org/en/news/articles/2024/03/29/pr24101-egypt-imf-executive-board-completes-first-second-reviews-eff-approves-augmentation
Obstfeld, M., & Rogoff, K. (2005). Global current account imbalances and exchange rate adjustments. Brookings Papers on Economic Activity, 2005(1), 67-146. https://doi.org/10.1353/eca.2005.0020
U.S. Bureau of Economic Analysis. (2025). U.S. international transactions, 4th quarter and year 2024 [News release]. https://www.bea.gov/news/2025/us-international-transactions-4th-quarter-and-year-2024
BUS 553 Module 2 instructions, in plain terms
The Aspen catalog includes the balance of payments among the global financial topics of BUS 553, and a module on it commonly asks students to explain the accounts and connect a country's external position to business decisions. Use the directions your instructor has posted for Module 2; this example ties the accounts to one company's receivables. Define the current, capital and financial accounts and explain why they must balance. Use current official data for at least one country, with the source and period. Explain what persistent deficits or surpluses imply and how they adjust. Show how balance of payments pressures, such as a shortage of foreign currency, affect firms. Recommend practical steps a company can take to manage the resulting risks.
Inside the BUS 553 Module 2 example
The paper opens with Platte River Irrigation's $4.6 million owed by its Egyptian distributor. The International Monetary Fund's Balance of Payments and International Investment Position Manual supplies the definitions of the accounts. BEA's release reports the 2024 U.S. current account deficit of $1.13 trillion and explains how the deficit is financed by net inflows on the financial account. Obstfeld and Rogoff's Brookings Papers article explains why large imbalances eventually require changes in exchange rates and spending. A section traces Egypt's foreign currency shortage, with a gap between official and parallel exchange rates and a backlog of import payments, to the company's overdue invoices. The IMF's March 2024 press release describes exchange rate unification, clearance of the backlog and an arrangement augmented to about $8 billion. Letters of credit, export credit insurance and smaller shipments close the paper.
Where the marks sit in the BUS 553 Module 2 rubric
Balance of payments papers are marked on accurate definitions, correct use of official data, a sound explanation of adjustment and a clear link to business consequences. This paper takes its definitions from the IMF's manual and its U.S. figures from BEA, stating the year and the share of GDP, so the grader can check them. Obstfeld and Rogoff's Brookings Papers article supplies the economics of adjustment, and the IMF's 2024 press release documents Egypt's reforms in the Fund's own words. The company's story turns the accounts into a concrete risk, showing how a country's shortage of foreign exchange becomes an exporter's overdue receivable. Recommendations draw on tools such as letters of credit and export credit insurance, connecting macroeconomics to the treasurer's desk.
BUS 553 Module 2 help: mistakes that cost marks
A frequent problem in balance of payments papers is confusing the trade balance with the current account, or treating a deficit as simply bad. Define each account and explain that a current account deficit is financed by financial account inflows. Use official data and cite the source and period. Avoid moral language about deficits; explain the risks and adjustment instead. When you connect the accounts to a company, show the mechanism, for example a central bank rationing foreign exchange, rather than asserting a link. Be careful with exchange rate figures in volatile countries, and use official sources. Finally, recommend specific tools a company can use, such as letters of credit, insurance or local currency pricing, and explain what each protects against.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Aspen University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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BUS 553 Module 2 questions, answered
What does BUS 553 Module 2 usually ask for?
Aspen's BUS 553 covers the balance of payments in this module, so explaining the accounts and how a country's external position affects business is typical. Follow your classroom prompt.
What are the main accounts in the balance of payments?
The current account, covering trade, income and transfers; the capital account, covering certain capital transfers; and the financial account, covering investment flows and changes in reserves.
Does a current account deficit mean a country is losing money?
Not necessarily. It means the country spends more abroad than it earns and finances the gap by borrowing or selling assets, which can be sustainable or risky depending on circumstances.
Where can I find a free BUS 553 Module 2 sample paper?
The complete paper is above: an irrigation equipment maker whose Egyptian distributor could not get dollars, explained through the balance of payments, BEA and IMF data and new payment terms.
How can exporters protect against foreign currency shortages?
By using confirmed letters of credit, export credit insurance, advance payments or shorter credit terms with customers in countries facing balance of payments pressure.