Deficit in the balance of payment is financed through

A deficit in the balance of payment occurs when a country's import expenditure exceeds its export earnings. To finance this deficit, a country can use various methods, including borrowing from foreign countries, selling assets to foreigners, and receiving foreign aid. These transactions fall under the capital account of the balance of payment. The capital account reflects the flows of funds between a country and its trading partners that are not related to trade in goods and services. Therefore, a deficit in the balance of payment is usually financed through the capital account.