Name: Areeba Siddique

Roll Number:006
Presentation: Balance of
payment problem
Balance of Payment Crisis in Pakistan
• Balance of payment crisis refers to a situation where a country
experience a shortage of foreign currency, making it difficult for it to
pay for essential imports and service its foreign debt.
Payment issues
• In the case of Pakistan, the country has struggled with balance of
payment issues for several years, and the COVID-19 Pandemic has
only exacerbated the situation. The pandemic has led to a decrease in
exports, a decline in foreign investment, and an increase in imports,
all of which have contributed to the country’s balance of payment
crisis.
High inflation
• One of the biggest impacts is inflation. When a country experiences a
shortage of foreign currency, it may be forced to devalue its currency,
which can lead to a rise in the cost of imports. This, in turn, can cause
inflation, making it harder for people to make ends meet.
There is decrease in economic growth
• Another impact is a decrease in economic growth. When a country is
unable to pay for essential imports and service its foreign debt, it can
have a negative effect economic activity, causing businesses to shut
down and unemployment to rise.
• Finally, the balance of payment crisis can also lead to a decline in the
standard of living. With inflation rising and economic growth declines,
it can be harder for people to access essential good and services, such
as healthcare end education.
What can be done to address the balance of
payment crisis in Pakistan?
• Increasing exports:By increasing the amount of good and services
that are exported, Pakistan can earn more foreign currency and
reduce its balance of payment deficits.
• Reducing imports:By reducing the amount of good and services that
are impacted. Pakistan can conserve its foreign currency reserves and
improve its balance of payment position.
• Attracting foreign investment:By attracting more foreign investment,
Pakistan can earn more foreign currency and reduce its dependence
on foreign loans.