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BALANCE OF PAYMENTS AND ITS PROBLEM IN PAKISTAN : 

2 BALANCE OF PAYMENTS AND ITS PROBLEM IN PAKISTAN Presented by : Ahtisham Rajput 107 Presented to : Sir Mohammad Saleh Memon Date : March 21, 2011

TABLE OF CONTENTS: 

3 TABLE OF CONTENTS Introduction To Balance Of Payments Terminology Of Balance Of Payments History Of Pakistan’s 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: 

4 INTRODUCTION Balance of payments is a statistical statement designed to provide for a specific period of time a systematic record of an economy’s 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: 

5 TERMINOLOGY OF BOP Recording Results 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. 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 :: 

6 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: 

7 CURRENT ACCOUNT Current Account 2007-08 2008-09 2008-09 2009-10 Balance -13874 9252 8982 - 3060 Summary Of Current account ($ Million)

CAPITAL AND FINANCIAL ACCOUNT: 

8 CAPITAL AND FINANCIAL ACCOUNT Capital And Financial Account 2007-08 2008-09 2008-09 2009-10 Balance 8252 6058 4495 3942 Summary Of Capital And Financial Account $ Million

FOREIGN RESERVES: 

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

EXPORTS PERFORMANCE OF PAKISTAN: 

10 EXPORTS PERFORMANCE OF PAKISTAN Major Exports Of Pakistan Composition Of Pakistan's Exports

EXPORTS PERFORMANCE OF PAKISTAN: 

11 EXPORTS PERFORMANCE OF PAKISTAN Major Sources Of Pakistan’s Exports

IMPORTS PERFORMANCE OF PAKISTAN: 

12 IMPORTS PERFORMANCE OF PAKISTAN

IMPORTS PERFORMANCE OF PAKISTAN: 

13 IMPORTS PERFORMANCE OF PAKISTAN

Summary Of BOP: 

14 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.

Problem Of Pakistan’s B.O.P: 

15 Problem Of Pakistan’s 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

Impacts Of Balance Of Payment Deficit On Economy : 

16 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 Country’s Currency Value May Depreciate

SUGGESTIONS: 

17 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.

CONCLUSION: 

18 CONCLUSION

Thank You for your patience: 

19 Thank You for your patience Querries Are Welcome....