Contents

INTRODUCTION....................................................................................................................................1
BALANCE OF PAYMENTS:.................................................................................................................1
POSITION OF BALANCE OF PAYMENTS OF PAKISTAN 1990-2013:....................................2
Causes of Deficit In BOP:.................................................................................................................3
Causes of Surplus in BOP:...............................................................................................................3

INTRODUCTION
BALANCE OF PAYMENTS:
No single country is self sufficient in producing and providing all kinds of goods
and services they need, but they are specialized in producing only one kind of
goods or services, in order to fulfill their needs of the kind of goods and services
they need they need to rely on other countries which are specialized in particular
type of good or service for this purpose the whole world is connected through
international trade they imports those goods and services from other countries
which is specialize in that particular good or service which they cant produce
domestically.
And the countries which is specialized in producing a particular type of good or
service they export it to the other countries who are in need of that particular
goods and services e.g Pakistan exports cotton, rice etc to other countries and in
return Pakistan imports those goods and services which they lakes e.g Capital
goods, edible oils to fulfill their needs.
The balance between the payment for imports and receipt in result of exports is
called balance of payments.
It is a record of economic transactions between residents of one country and the
rest of the world during the course of one year. The balance of payments like all
balance sheets must balance. The items which lead to an inflow of foreign
earnings are placed on the credit side of the balance sheet, whereas the items
which give rise to an outflow of foreign currency are placed on the debit side

POSITION OF BALANCE OF PAYMENTS OF PAKISTAN 1990-2013:

Balance of Payments of Pakistan (1990-2013)
(Million US $)
As a
percentage of
GNP*/GDP
Years export Import Trade Workers Current
s
s
Balanc Remittan A/c
(F.O.P) (F.O.P) e
ce
Balance
of
payment

Trade
Balance

Curren
t
A/C
Bal

198990

4634

7411

2483

1942

- 1891

- 4.9

- 4.7

199192

6131

7619

- 3128 1848

- 2171

- 3.3

- 4.8

199293

6762

8998

- 2236 1468

- 1346

- 4.8

- 2.8

199394

6685

8685

- 2000 1446

- 1965

- 3.4

- 3.8

199495

7759

10296

- 2537 1866

- 2484

- 3.7

- 4.1

199596

8311

12015

- 3704 1461

- 4575

- 4.9

- 7.2

199697

8096

11241

- 3145 1409

- 3846

- 5.7

- 6.2

199798

8434

10301

- 1867 1490

- 1921

- 2.4

- 3.1

199899

7528

9613

- 2085 1060

- 2429

- 2.8

- 4.1

199900

8190

9602

- 1412 983

- 1143

- 2.4

- 1.6

200001

8933

10202

- 1269 1087

- 513

- 2.1

- 0.7

200102

9140

9434

- 294

2389

- 1338

- 1.7

+ 1.9

200203

10889 11333

- 444

4237

3165

- 1.3

+ 3.8

20039175
993283 - 757
2875
1369
3.3
04
2004-05
14,401
18,753 -4352
4,168
-1,753
5.5
1.6
2005-06
16,388
24,647 -8259
4,600
-5,649
9.5
4.5
2006-07
17,119 26,614
-9,495
5,494 -7,361
5.1
2007-08
20,207 35,027
-14,820
6,451
-14,302
8.5
2008-09
18,918 31,410
-12,492
7,811
-9,395
5.7
2009-10
14,159 24,303
-10,144
5,658
-8,489
1.7
2010-11
14,218 22,242
-8,024
6,551
-2,894
2011-12
20014
34974
-14960
11,201
2012-13
25812
44238
-18426
2.1

+1.3

9.4
12.8
10.6
7.0
-

Causes of Deficit In BOP:

The balance of payments position of Pakistan has not been satisfactory since
1947. The country with the exceptions of 5 years i.e. (1950-51, 1954-55, 195556, 1958-59, and 1959-60) has been running a constant deficit in his balance of
payment in current account. The deficit in current account is being met by short
and long term loans from the other countries or from institutes as International
Monitory Fund (IMF) and the main reason of political instability from 1990 and
onwards.

Causes of Surplus in BOP:

The surplus on current account was due to devaluation of rupee and greater trade restrictions
on imports.
While in 1958 to 1960 BOP was in surplus due to introduction of Bonus vouchers.
Excluding the five years stated above, Pakistan has been facing a deficit in its BOP.
The deficit in current account in BOP for the year 1996-97 was $3.28 billion. It has been down to $
1.92 Billion during 1997-98 and $1.14 billion in 1999-2000. Pakistans current account balance was
favorable in 2002 to 2004. However it slipped again into danger zone in 2004-05 and 2006-07 due to
higher imports of oil and machinery. BOP deficit increased to $ 13.735 billion during 2007-08 against
$ 6.878 billion in 2006-07. During 2008-09 (July- April) the deficit reduced to $ 8.549 billion against
$11.173 billion in the corresponding year period last year but in 2009-10 this deficit reduced to $3.6

billion1 and now currently we have a trade surplus of 26 million in our current account which is a
good sign

References:

Pakistan and gulf economist, Power emergency, Feb 2-8,2009 ,topic Energy crisis : reality or
myth by Mohammad Ashfaq, page number 23

Pakistan and gulf economist, how to boost exports? Feb 14-20,2011 ,Kyrgyz holds immense
trade opportunities for Pakistan , page number 8,

Economic survey of Pakistan 2009-10, chapter name balance of payment, topic name direction
of exports page 94

Economic survey of Pakistan 2009-10, chapter name balance of payment topic: Exchange rate,
page 105

Pakistan and gulf economist, Power emergency, Feb 2-8,2009 , Fact sheet page number 61,
table

Economics of Pakistan by M. Seed Nasir edition 2009-10, chapter international trade page
number 184.

http://www.revolutionarydemocracy.org/rdv8n1/

http://www.dawn.com/news/372427/the-problem-of-deficit-inbalance-of-payments

http://www.sbp.org.pk/reports/annual/arFY01/qtr-index-eng.html