SEBI Grade A 2020: ECONOMICS: BALANCE OF PAYMENTS

www.practicemock.com 1 info@practicemock.com 011-49032737

 SEBI Grade A 2020: ECONOMICS: BALANCE OF PAYMENTS

Contents
BALANCE OF PAYMENTS ................................................................................................. 3
What is ‘Balance of Payment’?........................................................................................................................... 3
Why balance of payment is vital for a country? ................................................................................................. 3
Elements of balance of payment ......................................................................................................................... 3
Current Account .............................................................................................................................................. 3
Capital Account .............................................................................................................................................. 5
Financial Account ........................................................................................................................................... 6
The Balance of Payment (BoP)....................................................................................................................... 6
Convertibility of Indian Rupee: .......................................................................................................................... 6
Partial Convertibility of the Rupee: ................................................................................................................ 7
Full Convertibility of the Rupee: .................................................................................................................... 7
Current Account Convertibility: ..................................................................................................................... 7
Capital Account Convertibility(CAC): ............................................................................................................... 8
Definition: Capital Account Convertibility(CAC): ........................................................................................ 8
Purpose of CAC: ............................................................................................................................................. 8
Benefits of CAC:............................................................................................................................................. 8
Main Provisions Under the System of CAC: .................................................................................................. 8
Preconditions for CAC:................................................................................................................................... 8
Drawbacks of CAC: ........................................................................................................................................ 9
Balance of Payment (BoP) Crisis in India: ......................................................................................................... 9
Second BOP crisis......................................................................................................................................... 10
Crisis of 1990-91........................................................................................................................................... 10
Correction of BoP crisis ................................................................................................................................ 11

www.practicemock.com 2 info@practicemock.com 011-49032737

 SEBI Grade A 2020: ECONOMICS: BALANCE OF PAYMENTS
BALANCE OF PAYMENTS
What is ‘Balance of Payment’?
• Balance Of Payment (BOP) is a statement which records all the monetary transactions made
between residents of a country and the rest of the world during any given period.
• This statement includes all the transactions made by/to individuals, corporates and the government
and helps in monitoring the flow of funds to develop the economy.

• When all the elements are correctly included in the BOP, it should sum up to zero in a perfect scenario.
• This means the inflows and outflows of funds should balance out. However, this does not ideally happen
in most cases.

• BOP statement of a country indicates whether the country has a surplus or a deficit of funds.
• When a country’s export is more than its import, its BOP is said to be in surplus.
• On the other hand, BOP deficit indicates that a country’s imports are more than its exports.

• Tracking the transactions under BOP is something similar to the double entry system of accounting.
• This means, all the transaction will have a debit entry and a corresponding credit entry.

Why balance of payment is vital for a country?

A country’s BOP is vital for the following reasons:
• BOP of a country reveals its financial and economic status.
• BOP statement can be used as an indicator to determine whether the country’s currency value is
appreciating or depreciating.
• BOP statement helps the Government to decide on fiscal and trade policies.
• It provides important information to analyze and understand the economic dealings of a country with
other countries.

• By studying its BOP statement and its components closely, one would be able to identify trends that may
be beneficial or harmful to the economy of the county and thus, then take appropriate measures.

Elements of balance of payment

• There are three components of balance of payment viz current account, capital account, and
financial account. The total of the current account must balance with the total of capital and financial
accounts in ideal situations.

Current Account
• The current account is used to monitor the inflow and outflow of goods and services between countries.
• This account covers all the receipts and payments made with respect to raw materials and manufactured
goods.
• It also includes receipts from engineering, tourism, transportation, business services, stocks, and
royalties from patents and copyrights.
• When all the goods and services are combined, together they make up to a country’s Balance Of Trade
(BOT).
• There are various categories of trade and transfers which happen across countries.
• It could be visible or invisible trading, unilateral transfers or other payments/receipts.
• Trading in goods between countries are referred to as visible items and import/export of services
(banking, information technology etc) are referred to as invisible items.
• Unilateral transfers refer to money sent as gifts or donations to residents of foreign countries. This
can also be personal transfers like – money sent by relatives to their family located in another country.

www.practicemock.com 3 info@practicemock.com 011-49032737

 SEBI Grade A 2020: ECONOMICS: BALANCE OF PAYMENTS
Visible Trade (Merchandise Transactions):
• A major part of transactions in foreign trade is in the form of export and import of goods (visible items).
The money earned from Indian exports of goods (e.g., TV sold to Bhutan) is credited (added) to this
account, whilst payments for imported goods (e.g., American Plane sold in India) are debited.

• Balance of Trade: The difference between exports of goods and imports of goods is known as the Balance
of Trade.

• If, export of goods (in terms of value) is gretaer than import of goods (In terms of value), we will have a
Trade Surplus.

• If, export of goods (in terms of value) less than import of goods (In terms of value), we will have a Trade
Deficit.

Invisible Trade:
Invisible transactions are further classified into three categories, namely Services, Income and
Transfers.

Services: It includes a large variety of non-factor services (known as invisible items) sold and purchased
by the residents of a country, to and from the rest of the world. Payments are either received or made to
the other countries for use of these services.

Non Factor Services are the services that are not generated by land, labour, capital and entrepreneurship
The income earned from the sale of Indian services abroad is known as an invisible export, e.g., an insurance
premium paid by a British ship-owner to an Indian broker. When Indian residents spend money on foreign
services, e.g., a week’s accommodation in London, they are creating invisible imports, because payment is
going out of India.

Income: It includes Profits and Dividends earned by residents of India on their investments abroad and
vice versa. It also includes interest payments i.e. servicing of debt liabilities.

Transfers: These are unilateral transfers which include gifts, donations, personal remittances and other
‘one-way’ transactions. These refer to those receipts and payments, which take place without any service
in return.

Balance on Current Account:

• In the current account, receipts from export of goods, services and unilateral receipts are entered as
credit or positive items and payments for import of goods, services and unilateral payments are entered
as debit or negative items.
• The net value of credit and debit balances is the balance on current account.

• A current account deficit means the value of imports of goods, services, investment incomes, transfers is
greater than the value of exports. It indicates net outflow of foreign exchange.
• A current account surplus means the value of imports of goods,services, investment, incomes, transfers
is less than the value of exports. It indicates net inflow of foreign exchange.

www.practicemock.com 4 info@practicemock.com 011-49032737

 SEBI Grade A 2020: ECONOMICS: BALANCE OF PAYMENTS
Capital Account
• All capital transactions between the countries are monitored through the capital account.
• Capital transactions include the purchase and sale of assets (non-financial) like land and properties.
• The capital account also includes the flow of taxes, purchase and sale of fixed assets etc by migrants
moving out/in to a different country.
• The deficit or surplus in the current account is managed through the finance from capital account and
vice versa.

There are 4 major elements of capital account:

• Loans & borrowings: It includes all types of loans from both the private and public sectors located in
foreign countries, which are categorised as Sovereign Loan and Commercial Loans.

• Foreign Investments: These are funds invested in the corporate stocks by non-residents. Foreign
investment consist of Foreign Direct Investment (FDI), Foreign Portfolio Investment(FPIs), Foreign
Institutional Investors (FIIs), External Commercial Borrowings(ECBs), American Depository
Receipts/Global Depository Receipts (ADRs/GDRs).

• Banking Capital: Bank capital is the difference between a bank's assets and its liabilities, and it
represents the net worth of the bank or its equity value to investors. The asset portion of a bank's
capital includes cash, government securities, and interest-earning loans (e.g., mortgages, letters of
credit, and inter-bank loans).The liabilities section of a bank's capital includes loan-loss reserves and
any debt it owes. A bank's capital can be thought of as the margin to which creditors are covered if the
bank would liquidate its assets.

• Basel I, Basel II, and Basel III standards provide a definition of the regulatory bank capital that market
and banking regulators closely monitor.

• Bank capital is segmented into tiers with Tier 1 capital the primary indicator of a bank's health.

• Foreign exchange reserves – Foreign exchange reserves held by the central bank of a country to
monitor and control the exchange rate does impact the capital account.

• The foreign currency held in a country is also taken into account while maintaining the balance of
payments accounts. The components of India’s Foreign Exchange Reserves include: Foreign exchange
(Foreign Currency Assets), Gold, Special Drawing Rights (SDR) and Reserve Tranche Position in the IMF

Balance on Capital Account:

• The transactions, which lead to inflow of foreign exchange (like receipt of loan from abroad, sale of
• assets or shares in foreign countries, etc.), are recorded on the credit or positive side of capital account.
Similarly, transactions, which lead to outflow of foreign exchange (like repayment of loans, purchase of
assets or shares in foreign countries, etc.), are recorded on the debit or negative side.
• The net value of credit and debit balances is the balance on capital account.
• Surplus in capital account arises when credit items are more than debit items. It indicates net inflow of
capital.
• Deficit in capital account arises when debit items are more than credit items. It indicates net outflow of
cap

Balance on Current Account and Capital Account:

• Balance on current account and balance on capital account are interrelated. A deficit in the current
account must be settled by a surplus on the capital account. A surplus in the current account must
be matched by a deficit on the capital account.

www.practicemock.com 5 info@practicemock.com 011-49032737

 SEBI Grade A 2020: ECONOMICS: BALANCE OF PAYMENTS
Financial Account
• The financial account measures changes in domestic ownership of foreign assets and foreign ownership
of domestic assets.
• If foreign ownership increases more than domestic ownership does, it creates a deficit in the financial
account.
• This means the country is selling off its assets, like gold, commodities, and corporate stocks, faster than
it is acquiring foreign assets.
• Also included are government-owned assets such as foreign reserves, gold, special drawing rights
(SDRs) held with the International Monetary Fund, private assets held abroad, and direct foreign
investment. Assets owned by foreigners, private and official, are also recorded in the financial account.

The Balance of Payment (BoP)

• The current account should be balanced against the combined-capital and financial accounts.
However, as mentioned above, this rarely happens.
• We should also note that, with fluctuating exchange rates, the change in the value of money can add to
BoP discrepancies.
• When there is a deficit in the current account, which is a balance of trade deficit, the difference can be
borrowed or funded by the capital account.
• If a country has a fixed asset abroad, this borrowed amount is marked as a capital account outflow.
• However, the sale of that fixed asset would be considered a current account inflow (earnings from
investments). The current account deficit would thus be funded.
• When a country has a current account deficit that is financed by the capital account, the country is
foregoing capital assets for more goods and services.
• If a country is borrowing money to fund its current account deficit, this would appear as an inflow of
foreign capital in the BoP.
• When the export of a country exceeds the import, then BoP is termed as the favorable BoP or surplus
BoP. But when import exceeds the export, then BoP is termed as the unfavorable or deficit BoP.

Convertibility of Indian Rupee:

• Indian economy was under strict foreign exchange control system in the first four decades of planning.
• As part of the liberalisation of the Indian economy the Government of India (GOI) started dismantling
the foreign exchange control system from 1991-92 onwards.
• The convertibility of a currency such as Rupee has different meanings in different times.
• In existing standards, it means that the country’s currency becomes convertible in foreign exchange and
vice versa in the market.
• The definition should be seen in historical aspect of foreign currency regulation in India.
• Almost at the same when India got independence, the Foreign Exchange Regulation Act 1947 was
enacted with the object of regulating certain dealings in foreign exchange and the import and export of
currency and bullion.
• The focus of this act was on dealings in Foreign exchange and payments which directly affect foreign
exchange resources.
• This act was later replaced by the Foreign Exchange Regulation, Act, 1973, which we call FERA. Later
FERA was laid to rest and its successor is now FEMA.

www.practicemock.com 6 info@practicemock.com 011-49032737

 SEBI Grade A 2020: ECONOMICS: BALANCE OF PAYMENTS
Partial Convertibility of the Rupee:
• In 1991-92 the GOI adopted a dual exchange rate system under which the official rate of exchange
was controlled and the market rate (or the black-market rate) of exchange was free to move or fluctuate
according to forces of supply and demand.

• All of India’s foreign exchange remittances—earned through export of goods or services or through
inward remittances—were allowed to be converted in the following manner:
o 60% of the export earnings could be converted at the market determined rate; this amount
could be used freely for current account transactions and payments (i.e., for import of goods, for
travel and for remittances abroad).
o The balance 40% of the earnings should be sold to RBI through authorised dealers at the
official rate of exchange; this amount of foreign exchange would be made available by RBI for
financing preferred imports, bulk imports, etc.

• The system of dual exchange rate of the rupee enabled the exporters to convert (at least) 60% of their
export earnings at the market rate of exchange which was much higher than the official exchange rate.
The GOI expected that this would provide adequate incentive to exporters and increase foreign exchange
earnings.

Full Convertibility of the Rupee:

• The existence of the dual exchange rate has hurt exporters and Indians working abroad who had to
surrender 40% of their earnings at the official rate which was lower than the market rate of exchange.
• In order to remove this defect, the GOI announced full convertibility of the rupee on trade account.
• This measure enabled Indian exporters and Indian workers abroad convert 100% of their foreign
exchange earnings at the market rates.

• As the next step, the GOI announced the convertibility of the rupee on the current account, that
is, liberalise the access to foreign exchange for all current business transactions including travel,
education, medical expenses, etc.
• The basic objective of the GOI was to eliminate reliance upon illegal channels for such legitimate
transactions.
• Full current account convertibility of the Rupee is in operation since the middle of 1990s.
• This move was justified by India’s unprecedented success in the international sector, viz., spectacular
rise in forex reserves, increase in exports, stagnation of imports in dollar terms and improvements in
balance of payments on current account.

• Indian rupee is fully convertible only in the current account and not in the capital account
• This means one can import and export goods or receive or make payments for services rendered.
However, investments and borrowings are restricted.

Current Account Convertibility:

• All current transactions of India with other countries—in respect of trade (merchandise), services such
as education, travel, medical expenses, etc. and ‘invisibles’ such as remittances—are fully met through
full convertibility of the Rupee into other currencies.
• The Rupee can be used to buy other currencies and other countries can buy Indian rupee without limit.
• In case of current account convertibility, it is important to have a transaction involving payment or
receipt of one currency against another currency (in respect of importing and exporting of goods, buying
and selling of services, inward or outward remittances, etc.).

www.practicemock.com 7 info@practicemock.com 011-49032737

 SEBI Grade A 2020: ECONOMICS: BALANCE OF PAYMENTS
Capital Account Convertibility(CAC):
• Under CAC any Indian or Indian company is free to convert Indian financial assets into foreign financial
assets and reconvert foreign financial assets into rupees at the prevailing market rate of exchange.
• This means that CAC removes all the restrains on international flows on India’s capital account.
• In case of capital account convertibility, a currency can be converted into any other currency even
without any transaction.

Definition: Capital Account Convertibility(CAC):

• The RBI appointed in 1997 the Committee on Capital Account Convertibility with Mr. S. S. Tarapore as
its Chairperson.
• The Tarapore Committee defined CAC as “the freedom to convert local financial assets into foreign
financial assets and vice versa at market-determined rates of exchange.”
• CAC would permit anyone to move freely from local currency into foreign currency and back.

Purpose of CAC:
• The basic purpose of CAC is to woo foreign investors by sharing an easy market to move in and move
out and to send a strong message that Indian economy is strong and vibrant enough to invest.
• And India has sufficient forex reserves to meet any flight of capital from the country—whatever may be
its extent.

Benefits of CAC:
The potential benefits from the CAC are:
• Availability of large funds to supplement domestic resources and thereby promote faster economic
growth.
• Improved access to international financial markets and reduction of the cost of capital.
• Incentive for Indians to acquire and hold international securities and assets.
• Improvement (strengthening) of the financial system in the context of global competition

Main Provisions Under the System of CAC:

• Indian companies would be allowed to issue foreign currency denominated bonds to local investors, to
invest in such bonds and deposits to issue Global Depository Receipts (GDRs) without RBI or GOI
approval and to go for external commercial borrowings subject to certain limits.

• Indian residents would be permitted to have foreign currency denominated deposits with banks in India,
to make transfers of financial capital to other countries within certain limits, and to take loans from non-
relatives and others up to a ceiling of $1 million.
• Indian banks would be permitted to borrow from overseas markets for short-term and long-term up to
certain limits, to invest in overseas money markets, to accept deposits and extend loans denominated
in foreign currency. Such facilities would also be available to non- bank financial institutions and financial
intermediaries like insurance companies, investment companies and mutual funds.

• All India financial institutions which fulfill certain regulatory and prudential require-ments would be
allowed to participate in foreign exchange market along with banks which are the only Authorised Dealers
(ADs) now. At a later stage, certain select Non-Bank Financial Companies (NBFCs) would also be
permitted to act as Ads in foreign exchange markets.

• Banks and financial institutions would be permitted to operate in domestic and interna-tional markets.
They would be allowed to buy and sell gold freely and offer gold denominated deposits and loans.

Preconditions for CAC:

According to the Tarapore Committee four preconditions have to be fulfilled to ensure full currency
convertibility:

www.practicemock.com 8 info@practicemock.com 011-49032737

 SEBI Grade A 2020: ECONOMICS: BALANCE OF PAYMENTS

• Reducing Fiscal Deficit: Fiscal deficit should be reduced to 3.5% of GDP.

• Reducing Public Debt: The GOI should also set up a Consolidated Sinking Fund (CSF) to reduce its
debt.

• Fixing Inflation Target: The GOI should fix the annual inflation target between 3% to 5%. This is
called mandated inflation target. The GOI should also give full freedom to the RBI to use monetary
weapons to achieve the inflation target.

• Strengthening the Indian Financial Sector: For this, four conditions are to be satis-fied:
• Full deregulation of interest rates,
• Reduction of gross Non-Performing Assets (NPAs) to 5%,
• Reduction of average effective CRR to 3% and
• Liquidation of weak banks or their merger with other strong banks.

Apart from these, the Tarapore Committee also recommended that:

o The RBI should fix an exchange rate band of 5% around real effective exchange rate and should
intervene only when the Real Effective Exchange Rate (REER) is outside the band.
o The size of the current account deficit should be within manageable limits and the debt service ratio
should be gradually reduced from the present 25% to 20% of the export earnings.
o To meet import bill and to service external debt, forex reserves should be adequate and range between
$22 billion and $32 billion.
o The GOI should remove all restrictions on the movement of gold.

Drawbacks of CAC:
There are certain dangers associated with CAC:
• Contagion Effect: The Asian financial crisis of 1997 makes it abundantly clear that financial crisis from
one country may be easily transmitted to other countries having convert-ible currencies. Any adverse
development in overseas market will affect India’s economy equally adversely—as was amply shown in
the recent world recession of 2008-09.

• Speculation: A convertible currency shows greater fluctuation than an inconvertible one and thus gives
greater scope for destabilising speculation. This creates uncertainty and reduces the volume of trade.

• Outflow of Funds: Indians will have a tendency to buy more assets abroad and India may become a
debtor nation like the USA since it may develop a tendency to spend beyond its means.

• No Ceiling on External Debt: Finally, there will be no ceiling on India’s external debt since the GOI—
knowing well that rupee can now be used for debt serving—will borrow with-out limits.

Balance of Payment (BoP) Crisis in India:

• From 1947 till 1956-57, the India had a current account surplus.

www.practicemock.com 9 info@practicemock.com 011-49032737

 SEBI Grade A 2020: ECONOMICS: BALANCE OF PAYMENTS
• By the end of the first Five Year plan, the Trade deficit was Rs. 542 Crore and Net Invisibles was Rs. 500
Crore, thus giving a BoP deficit in Current Account worth Rs. 42 Crore.
• From this time onwards, the trade deficit increased from 3.8% of the GDP at market prices to 4.5% of
GDP. Due to this, the government imposed the exchange controls. This was the first BoP crisis, ever
India faced, after independence.

Second BOP crisis

• In 1965, when India was at war with Pakistan, the US responded by suspension of aid and refusal to
renew its PL-480 agreement on a long term basis.
• The idea of US as well as World Bank was to induce India to adopt a new agricultural policy and devalue
the rupee. Thus, the Rupee was devalued by 36.5% in June 1966.
• This was followed by a substantial rationalization of the tariffs and export subsidies in an expectation of
inflow of the foreign aid.
• The BoP improved, but not because of inflow of foreign aid but because of the decline in imports.
• After the 1966-67, the BoP of India remained comfortable till 1970s. The first oil shock of 1973-74 was
absorbed by the Indian Economy due to buoyant exports. After that there was an expansion of the
international trade.

Crisis of 1990-91
• When we usually discuss about the BoP crisis in India, we refer to that one of 1990-91. This crisis had
its origin from the fiscal year 1979-80 onwards.
• By the end of the 6th plan, India’s BoP deficit (Current account) rose to Rs. 11384 crore. It was the mid
of 1980s when the BoP issue occupied the centre position in India’s macroeconomic management policy.
• The second Oil shock of 1979 was more severe and the value of the imports of India became almost
double between 1978-78 and 1981-82.
• From 1980 to 1983, there was global recession and India’s exports suffered during this time.

• The trade deficit was not been offset by the flow of the funds under net invisibles. Apart from the external
assistance, India had to meet its colossal deficit in the current account through the withdrawal of SDR
and borrowing from IMF under the extended facility arrangement. A large part of the accumulated foreign
exchange fund was used to offset the BoP.

• During the 7th plan, between 1985-86 and 1989-90, India’s trade deficit amounted to Rs. 54, 204 Crore.
The net invisible was Rs. 13157 Crore and India’s BoP was Rs. 41047 Crore.
• India was under a sever BoP crisis. In 1991, India found itself in her worst payment crisis since 1947.
The things became worse by the 1990-91 Gulf war, which was accompanied by double digit inflation.

• India’s credit rating got downgraded. The country was on the verge of defaulting on its international
commitments and was denied access to the external commercial credit markets.
• In October 1990, a Net Outflow of NRI deposits started and continued till 1991.

• The only option left to fulfil its international commitments was to borrow against the security of India’s
Gold Reserves as collateral.
• The prime Minister of the country’s caretaker government was Chandrashekhar and Finance Minister
was Yashwant Sinha.
• The immediate response of this Caretaker government was to secure an emergency loan of $2.2 billion
from the International Monetary Fund by pledging 67 tons of India’s gold reserves as collateral. This
triggered the wave of the national sentiments against the rulers of the country.
• India was called a “Caged Tiger”. On 21 May 1991, Rajiv Gandhi was assassinated in an election rally
and this triggered a nationwide sympathy wave securing victory of the Congress.
• The new Prime Minister was P V Narsimha Rao. P V Narsimha Rao was Minister of Planning in the Rajiv
Gandhi Government and had been Deputy Chairman of the Planning Commission.

www.practicemock.com 10 info@practicemock.com 011-

49032737
 SEBI Grade A 2020: ECONOMICS: BALANCE OF PAYMENTS
• He along with Finance Minister Manmohan Singh started several reforms which are collectively called
“Liberalization”.
• This process brought the country back on the track and after that India’s Foreign Currency reserves have
never touched such a “brutal” low.

In 1991, the following measures were taken:

• In 1991, Rupee was once again devaluated.
• Due to the currency devaluation the Indian Rupee fell from 17.50 per dollar in 1991 to 45 per dollar in
1992.
• The Value of Rupee was devaluated 23%.
• Industries were Delicensed.
• Import tariffs were lowered and import restrictions were dismantled.
• Indian Economy was opened for foreign investments.
• Market Determined exchange rate system was introduced. This was initiated with Liberalized Exchange
Rate Management System (LERMS)

Correction of BoP crisis

Liberalized Exchange Rate Management System (LERMS)
• In the Union Budget 1992-93, a new system named LERMS was started.
• The LERMS was introduced from March 1, 1992 and under this, a system of double exchange rates was
adopted.
• Under LERMS, the exporters could sell 60% of their foreign exchange earning to the authorized Foreign
Exchange dealers in the open market at the open market exchange rate while the remaining 40% was
to be sold compulsorily to RBI at the exchange rates decided by RBI.

• Another important feature of LERMS was that the Government was providing the foreign exchange only
for most essential imports.
• For less important imports, the importers had to arrange themselves from the open market.

• Thus, we see that LERMS was introduced with twin objectives of building up the Foreign Exchange
Reserves and discourage imports. At that time, the government was successful in achieving both of
these objectives.

Rangarajan Panel for correcting BoP

• The Report of the High Level Committee on Balance of Payments, of which Dr. Rangarajan was the
Chairman, was submitted in June 1993. The important recommendations of this panel were as follows:
o A realistic exchange rate and a gradual relaxation of the restrictions on the current account should
go hand in hand.
o Current account deficit of 1.6% of GDP should be treated as a ceiling.
o Government should be cautious of extending concessions or facilities to the Foreign Investors.
The concessions were more to the foreign investors than to the domestic players.
o All external debts should be pursued on a prioritized on the basis of the Use on which the debt is
to be put.
o No approval should be accorded for a commercial loan which has a maturity of less than 5 years.
o There should be efforts so that Debt flows can be replaced by the equity flows.
o RBI should target a level of reserves that took into account liabilities that may arise for debt
servicing, in addition to imports of three months.

www.practicemock.com 11 info@practicemock.com 011-

49032737