TM ENT OF ECO NOMIC S

DEPAR
CO L L EG E ,PUNE
FERGUSSON C E-1
MACRO - EC ON OMICS

BA L A N C E OF P A Y ME N T S :
M IC CR I SI S I N SR I L A NK A
AND ECO N O
 MAHESH RAOSAHEB CHABUKSWAR
PREPARED BY:
SYBA (A)
ROLL NO: 60
AKSHAY HANUMANT KHOSE
SPL: ECONOMICS
SYBA (A)
ROLL NO: 6008
SPL: ECONOMICS Guided by: Prof. Shantanou sir
(Department of economics
FC Pune)
• WHAT IS BOP ?
“The balance of Payments of a country is systematic record of all economic
transactions between the residents of the country and residents of foreign
countries during a given period of time”.

Economic transactions:
1. Visible items
2. Invisible items
3. Unilateral transfers
4. Capital transfers
• COMPONENTS OF BOP A/C
All transactions are broadly classified into 2 accounts

1. Current account Balances:

2. Capital account Balances:

• DISEQUILIBRIUM IN BOP
Disequilibrium in Bop means a condition of Surplus Or
deficit.
• A surplus in Bop : (Favourable)

Bop= credit > debit

• A deficit in Bop: (Unfavourable)

Bop= Credit < debit

• CAUSES OF DISEQUILIBRIUM
1. Cyclic fluctuations:

2. Short fall in the exports:

3. Economic development:

4. Rapid increase in population:

5. Structural changes:

6. Natural calamities:

7. International capital movements:

• MEASURES TO CORRECT DISEQUILIBRIUM
IN BOP
1. Monetary measures:
1. Monetary policy: Contraction or expantion of money supply.

b. Fiscal policy: Increase or decrease in gov expenditure

c. Devaluation: Exports increase

d: Deflation: gov can increase exports to earn more forex

e. Exchange control: licensing exporters and importers.

2. Non monetary measures

a. Export Promotion: imports may reduce, cash assistance, subsidise,

exemption from taxes
b. Import substitutes: Ex: make in India, atmanirbhar bharat

c. Import Control:
1. Quotas: Fixex the maximum values of commodity can be
imported
2. Tariffs: Duties import on imports
Case study:

Economic crisis in
Sri Lanka
ECONOMIC PROBLEMS IN SRI LANKA
1. Raising debts:
2. Decreasing foreign exchange
reserves:
3. Inflation:
4. Energy crisis:
5. Food crisis:
• Possible reasons of the
crisis
1. High annual imports expenditure:
import bill around $22 billion

In million dollars
2. No surplus or quality production for
exports: export receipts << import bills
(export earning is only arround $11 billion

Sri Lanka’s Trade deficit

3. China’s Debt trap diplomacy:

4. Covid-19 pandemic hitting tourism

industry:
Tourism revenue in
mn $
5. Dropping forex reserves: from $7.5 to
$2.8 billion

6. Decision of complete shift to Organic

farming: further strengthen the crisis by
food shortage
 Related 2021 2020 Unit

Balance of Trade -1085.00 -553.10 USD Million

Current Account -740.80 -990.17 USD Million

Current account to
-1.30 -2.20
GDP

Tourism Revenue 59.50 31.60 USD Million

Imports 22410.00 17640.60 USD Million

Exports 11560.00 12111.50 USD Million
REFERENCES:
Central Bank of Sri Lanka
RBI
The economic Times
Macroconomics theory and policy by HL Ahuja

Thank you