Balance of Payments

Balance of trade Balance of Payment

Balance of Trade:
The total value of the exports and imports of
just visible commodities are taken into account.
Balance of Payment:
The total value of exports and imports of visible
and invisible both commodities are taken into
account.
 Sections of BOP

BOP at current account BOP capital account

Concerned with movement

Concerned with current of capital from one country
transactions of goods to another i.e. foreign loans
and foreign investments.
Non value added exports
Huge expenditure on exports
Unfavorable terms of trade
Devaluation
Repayment of debt and interest
Consumption oriented society
Import of oil and machinery
Inflation
Political uncertainty
Domestic problems
International competition
• Encourage exports and discourage imports
• Deflation
• Devaluation
• Exchange control
• Promotion of small scale industries
• Protection to infant industries
• Promotion of labor intensive industries
• Packaging and grading of goods
• Joint ventures
• Reduction in invisible imports
• International monetary fund (IMF)