Balance of Payments

Balance of payments

Definition 

Record of economic transaction between the resident of one country and the rest of the world during the course of one year.

Main items
account  Capital account a) visible goods b) services c) un required transfers 
Current

Surplus/Deficit 
Surplus:

Receipts are greater than payments  Deficit : Payments are greater than receipts

Pakistan's balance of payments
year 1959-60 1959 (surplus of 578crore ) 578crore  In year 1954-55 1954 (surplus of 09.9crore ) 09.  In year 1958-60 1958 In

year 1996-97 1996(deficit of 3.28 billion dollars)  In year 1997-98 1997(deficit of 1.92 billion dollars)  In year 1999-2000 1999(deficit of 1014 billion dollars) 
In

Reasons of adverse BOP
of capital goods  Rise in oil prices  Consumption oriented society  Deterioration in term of trade  Domestic developments  Cotton rice led growth 
Import

Measure for correcting BOP 
Export

led growth in imports in invisible imports 

Reduction 

Reduction

Export led growth
Some measure to be adopt for increasing exports and alleviating the balance of payments  Promotion of labour intensive industries  Decrease in consumption  Restoration of sick industries  Reduction in exports duties

Reduction in imports
The Government should reduced the imports of consumer goods which amount to about 50% of total 50% imports. The raw material which can be produced in the country at cheaper rate should not be imported.

Reduction in invisible imports 
Payments

on invisible item like shipping, insurance, banking services, payments to technocrat working in various establishments etc., has been on increase. It has to be curtailed down.

THE END

THANKS

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