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BALANCE OF PAYMENTS AND ITS PROBLEM IN PAKISTAN

Presented by : Presented to : Ahtisham Rajput 107 Sir Mohammad Saleh Memon March 21, 2011

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TABLE OF CONTENTS

Introduction To Balance Of Payments Terminology Of Balance Of Payments History Of Pakistans Export Performance Exports From 1947 To 1971 Problems Of Pakistan Balance Of Payment Impacts Of Balance Of Payment Deficit On Economy Suggestions To Overcome Balance Of Payment Deficit

Conclusion

INTRODUCTION

Balance of payments is a statistical statement designed to provide for a specific period of time a systematic record of an economys transactions with the rest of the world. It is a Systematic record of all the economic transactions between the country and the rest of the world. BOP PERFORMANCE HISTORY Surpluses in Pakistan BOP Reasons Of Surplus

TERMINOLOGY OF BOP
Recording Debit: The spending of foreign currency is Debit and it is a negative item. Credit: If a transaction earns foreign exchange for the nation, it is recorded as a plus item and it is a Credit. Generally Imports are debits and exports are credits. Results If debits are more i.e. imports are more than it is a negative sign for the economy and it is known as Deficit. If credits are more i.e. exports are more than it is a positive sign for the economy and it is known as Surplus. Pakistan has a Deficit B.O.P for many years due to dependency on imports.

BALANCE OF PAYMENTS- COMPONENTS :

B.O.P Comprises of :

Current Account includes : Merchandise (Import/Export) , Services, Investment Income and Unilateral Transfers (Foreign Aid etc.)
Financial Account And Capital Account includes: Loan transactions, Investment Flows, Short term capital and other related items. Official Reserves: Holding of foreign currency by state bank is known as foreign reserve.

CURRENT ACCOUNT
Summary Of Current account
Current Account Balance 2007-08 -13874 2008-09
-9252

($ Million)
2008-09
-8982

2009-10 - 3060

CAPITAL AND FINANCIAL ACCOUNT

Summary Of Capital And Financial Account
Capital And Financial Account Balance 2007-08 8252 2008-09 6058 2008-09 4495

$ Million
2009-10 3942

FOREIGN RESERVES

Source:http://www.sbp.org.pk/ecodata/forex.pdf

EXPORTS PERFORMANCE OF PAKISTAN

Major Exports Of Pakistan

Composition Of Pakistan's Exports

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EXPORTS PERFORMANCE OF PAKISTAN

Major Sources Of Pakistans Exports

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IMPORTS PERFORMANCE OF PAKISTAN

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IMPORTS PERFORMANCE OF PAKISTAN

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Summary Of BOP

Current Position Of Current Account. Current Position Of Capital and financial account. Current Position Of foreign Reserves. Current Position Of Exports And Imports Current Position Of Bop.

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Problem Of Pakistans B.O.P

Dependence On Textile Import Oriented Industry Tough Competition In International Market Political Uncertainty Increase In Prices Of Inputs Fiscal Policy Exports Of Primary Goods And Imports Of Finished Goods Energy Crisis Dependence On Foreign Assistance Natural Disasters Shortage Of Availability Of Credit To Private Sector Limited Countries Exports Strikes And Processions Rise In Freight Rates Consumption Oriented Society
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Impacts Of Balance Of Payment Deficit On Economy

Foreign Reserves Of Country Shrink

It Leads Us To Borrow Money From Other Financial Institutions

Foreign Earning Will Decrease

Countrys Currency Value May Depreciate

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SUGGESTIONS

Improve The Technology Exploration Of New Markets Ban On Strikes And Processions Law And Order Brand Oriented Marketing Cost Of Doing Business Dependence On Textile Sector Exports Minimize Expenditure On Importing Services Export Of Finished Goods Rather Than Primary Goods Resolution Of Energy Problem Improved Fiscal Policy Improved Infrastructure Pakistan needs a leadership with competence, very strong nerves, clear understanding of the issues and psyche of the other side of the table, ability to negotiate with the super powers and come out with a most suitable package.
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CONCLUSION

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Thank You for your patience

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