Download the balance of payment problem in developing

The Journal of Commerce
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THE BALANCE OF PAYMENT PROBLEM IN DEVELOPING
COUNTRIES, ESPECIALLY IN PAKISTAN
Hafeez ur Rehman, *
Hafiz Abdur Rashid
Abstract. The balance of payments has been an important indicator of the
growing economic activities in all the countries. It reflects how much a country is
technically developed and competitive in the world market. Balance of payments
is the statistical record of all transactions taking place between its residents and
the rest of the whole world. There are three analytical approaches to the balance
of payments namely; the elasticities approach, the absorption approach and the
monetary approach. There are many factors that determine the position of
balance of payments in the country either it is surplus or deficit. This study
highlights these multi-factors for the developing countries and mainly focused
on Pakistan. The statistically the balance of payment position of Pakistan is
analyzed and use full policy measures are suggested. These policy measures may
be helpful to improve balance of payments position in Pakistan and in other
developing countries.
Introduction
Balance of Payments problem in developing countries, especially in
Pakistan has been very important and burning issue of the recent days. It tells
how many goods and services a country has been exporting and importing and
how much a country is borrowing or lending. In this way BOP accounts are the
statistical record of all transactions taking place between its residents and rest of
the world and would help to formulate a country’s future strategy.
This is the time of competition and technology. The one who will opt new
methods of living, new methods of economic stability will get his share from the
rest of the world, otherwise will remain behind. Pakistan being a developing
country should go forward to enter in the circle of developed countries. For this
purpose we have to correct our BOP situation.
*
The authors are Associate Professor, Economics Department, Punjab University, & Lecturer,
Hailey College of Commerce, Punjab University, Lahore Respectively.
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The Balance of Payment Problem in Developing Countries,
Especially in Pakistan
Many problems are common in almost all developing countries but some
are area specific and are especially meant for Pakistan. This study has been
divided in three sections. Section 1 relates to concept of BOP, discussing the
methodology, causes and methods for improvement of BOP, profile of
developing countries and the problems of BOP have been discussed in section 2.
In section 3 two ways of presentation of BOP in Pakistan are presented. BOP
situation in Pakistan has been discussed with the help of supporting data, and
then in the final section the BOP problems and measures to improve imbalance
have been discussed.
I.
Balance of Payments
The balance of Payment (BOP) of a country is a systematic record of all
economic transactions between the residents of the reporting country and the
residents of foreign countries during a given period of time. Balance of Payment
(BOP) is a statistical statement that systematically summarizes, for a specific time
period, the economic transactions of an economy with the rest of the world.
Transactions, for the most part between residents and non-residents, consists of
those involving goods, services and income; those involving financial claims on,
and liabilities to, the rest of the world; and those (such as gifts) classified as
transfers, which involve offsetting entries to balance — in an accounting sense —
one side transactions. The balance of payments is one of the most important
statistical statements for any country. It tells us how many goods and services
the country has been exporting and importing and whether the country has been
borrowing from or lending money to the rest of the world. It also tells whether or
not the central monetary authority has added to or reduced its reserves of foreign
currency is reported in the statistics.
So a nation’s BOP accounts are the statistical record of all transactions
taking place between its residents and the rest of the world. The BOP accounts
also show the connection between foreign transactions and national money
supplies. Therefore a thorough understanding of BOP accounting will help us in
evaluating the implications of a country’s international transactions. So in order
to know what is happening to the course of international trade, government
keeps track of the transactions between countries. The main purpose of BOP is to
inform the government about the international economic position of a country
and to help make decisions about monetary and fiscal issues, on one hand, and
about trade and payments on the other hand.
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Approaches to the Balance of Payment
There are three analytical approaches to the BOP: (i) the elasticities
approach (ii) the absorption approach and (iii) the monetary approach.
(i)
The Elasticities Approach
Robinson developed this approach originally in 1930’s. It concentrates on
the elasticity condition necessary for a devaluation to improve the current
account component of BOP. It is a partial equilibrium model, which focus on the
response of exports and imports to charges in relative prices and ignores income
effects, capital flow, and the money market.
(ii)
The Absorption Approach
This approach emphasizes the fact that payments imbalances are
characterized by ex ante divergences between aggregate income receipts and
aggregate domestic expenditures (absorption). This approach focuses specific
attention upon the product market, rather less on the exchange rate market and
appears to ignore completely the money market.
(iii)
The Monetary Approach
According to this approach it would appear that what is happening to a
country’s BOP will depend, given the demand for money in that country and in
the rest of the world, upon the rate of the growth of the money supply in the
country vis-à-vis the rate of growth of the money supply in the rest of the world.
The key feature of the monetary approach is the automatic balance of payments
adjustment mechanism i.e., a BOP surplus or deficit is removed by adjustment of
money supply to money demand.
Collection, Reporting and Presentation of Balance of Payment Statistics
The balance of payment statistics records all the transactions between
domestic and foreign residents when they purchase or sale of goods, services or
of financial assets such as bonds, equities and banking transactions. Recorded
figures are normally in domestic currency of the reporting country. The
authorities are collecting these information from the custom departments,
surveys of tourists, data on capital inflows and out flows are obtained from
banks, and information on government expenditures and receipts with foreign
residents is obtained from local authorities and central government agencies. The
responses from the various sources are compiled by government statistical
agencies.
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The Balance of Payment Problem in Developing Countries,
Especially in Pakistan
There is no unique method governing the presentation of balance of
payments statistics and there can be considerable variations in the presentations
of different national authorities. However, the International Monetary Fund
provides guidelines for the compilation of such statistics published in its Balance
of Payment manual. In addition IMF publishes the balance of payment statistics
of all its member countries in a standardized format facilitating inter-country
comparison. These are presented in two publications — The Balance of Payment
Statistics Year Book and the International Financial Statistics. The usual reporting
period for all statistics is year. However, some of the statistics that make up the
balance of payments are also published on a more regular monthly and quarterly
basis.
According to IMF standard the record of BOP can be divided into two
major parts; the current account and the capital account, which are further
subdivided into some other parts. A schematic representation of the BOP can be
seen as under:
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Current Account
Exports and Imports of goods (visible)
Transport Services
Travel
BOP
Export and Import of Services
Investment
Business/Professional Services
Banking and insurance Services
Unilateral Transfers
Private unilateral Transfers
Govt. Unilateral Transfers
Capital Account
Private long term Investment
Govt. long term Investment
The Balance of Payment Problem in Developing Countries,
Especially in Pakistan
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Surplus and Deficit in Balance of Payment
Any payment to foreigners is a deficit item in BOP while any receipt from
foreigners is a surplus item in BOP. In other words whenever the demand for
foreign exchange is more than the supply of foreign exchange the deficit in BOP
occurs.
If receipts are equal to payments on the current account and long-term
capital account of balance of payment, then it is said the balance of payment of
that country is in balance. If receipts are larger than payments on both the
accounts, than it is said that the balance of payment is surplus. Conversely if
payments are larger then the receipt on both of these accounts, then it is said that
the balance of payment is in deficit. If there is persistent deficit in BOP then
country should take some measures. However, when a country enjoys surplus it
feels a sense of relief. The countries that have persistent deficit in their BOP may
take one or more of the following measures.
1.
2.
3.
4.
5.
6.
7.
By receiving assistance from IMF
By getting short term loans from other countries
By receiving grants from other countries
By selling foreign assets of the country
By reducing investment made in other countries.
By selling foreign currencies from country’s foreign
exchange reserves
Business firms of the country can purchase goods on credit
from other countries. The values of these imports need to be
paid later on, etc.
The position of a country having surplus in BOP is different from the
country having deficit in BOP. If there is persistent surplus in a country, there is
a continuous increase in the reserves of foreign exchange of that country and it is
not necessary to correct this kind of situation. Some countries however take some
measures sometimes to help the other countries. In addition, these steps would
help these countries to reduce internal inflationary pressures. Sometimes, the
countries running their surpluses are compelled to reduce the surpluses. For the
sake of balancing their BOP, these countries can lower rate of interest, can reduce
tax rates and can, raise government expenditures. They can lower tariff and other
barriers to trade. They can also liberalize export of capital or can do revaluation
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(i.e., raising the external value of its currency) or they can eliminate subsidies on
exports. There are few countries having surplus most of the time – one of them
is USA. From about World War-I until 1980, the United States was a net creditor
internationally; that is, it had more foreign assets than liabilities. Since the early
1980’s, however, the United States has continuously run larger annual current
account deficit. These current account deficits have had to be financed by net
foreign borrowing including sale of US owned assets to foreigners as well as the
incurring of new foreign debts.
II
Profile of Developing Countries
Most of the world’s population is substantially poor. The income range
among these developing countries is very wide. Some of these countries, such as
Singapore, are in fact on the verge of being “graduated” too advanced country
status, both in terms of official statistics and in the way they think about
themselves. Others, such as Bangladesh, remain desperately poor. Nonetheless,
for virtually all-developing countries attempt to close the income gap with more
advanced nations has been a central concern of economic policy. We have to see
some basic facts of developing countries, which are responsible for deficit in
BOP. These are large Population size, high Population growth rate and large
family size, low output and low per capita income, weak structure of production,
more hunger and poor health, low literacy rate, varying income inequality,
political instability, a high proportion of the labour force in agriculture,
inadequate technology and capital, low saving rate, dual economy and an
unskilled labor force, varying dependence on international trade and a high
proportion of primary product export.
Causes of BOP Problems for Developing Countries
BOP problem in developing countries is not caused by a single reason rather
there are multi reasons due to which this problem take place. The main factors
are discussed below:
Central Banks do not hold the currency of a small developing country as
reserves, because neither the government nor private banks will freely convert
them into gold, dollars or other international reserve assets. Only convertible
foreign currencies are held as foreign exchange reserves.
The developing countries are borrowing from abroad to finance their current
account deficit and start spending the funds but they have to increase their
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The Balance of Payment Problem in Developing Countries,
Especially in Pakistan
export capacity necessary to generate export earnings, to repay the debt. But due
to their internal constraints the developing countries are not able to utilize the
borrowed money properly that put them in the awkward position.
There is one entry in balance of payment that is called “Statistical discrepancy”
or “errors and omissions”. These measurement errors are larger in developing
countries due to mishandling of data because not having a sophisticated statistics
department due to their limited resources.
The developing countries may have the slow means of transportation and
communication. So goods that leave one developing country’s ports near the end
of the accounting year, may not reach their destination in time to be recorded in
the recipients import statistics for the same year. So there may be a chance of
discrepancy of missing data.
Sometimes interest payments earned abroad are not reported to government
authorities in the recipient’s home country. In many cases such interest payments
are credited directly to a foreign bank account and do not even cross-national
borders. So this situation is of great loss for developing countries.
Many developing countries can face the problem of dis-equilibrium in the
balance of payment because of persistent deficits in their trade with developed
countries. Developing countries has to make huge imports from advanced
countries for the sake of implementation their economic development
programmes but they are unable to make as much exports out of their domestic
production to finance their imports.
The inflow of grants from developed countries and foreign capital to these
countries is far short of their needs. As a result those countries are loosing their
reserves of foreign currencies and facing very serious difficulties in this regards.
Special drawing rights (SDRs) sometimes described as “”Paper Gold” are assets
created by IMF and their value is defined in terms of five currencies the Dollar,
Yen, Mark, Pound and French Frank. All these currencies are related to the
developed block. The developing countries would be having the exchange rate
difficulties at the time of improvement in the deficit of BOP; because only
convertible foreign currencies are held as foreign exchange reserves.
In developing countries there is a problem of dual economy. Often relatively
modern, capital-intensive, high-wage industrial sectors exist in the same country
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as well as a very poor traditional agriculture sector. This division of a single
economy into two sectors creates uneven distribution of wealth and is probably a
sign of markets working poorly. In case there is a combined effort for a country
to correct the BOP position would be difficult for whole of the economy, as this
economy has been divided into two sectors.
The developing countries basically based on agriculture. The production of
agriculture is highly uncertain. In case of any decrease, draught etc. the output of
agriculture can come down and the agricultural export decline sharply. So
agriculture-base economy cannot improve the BOP deficit rather the gap would
be increased many time.
It is the duty of the central bank to maintain a stable ratio between reserves and
liabilities but it cannot be done due to a lot of pressure from the country’s
problems such as political problems etc. At the same time central bank is not
only an important holder of assets.
The developing countries are highly populated with higher population growth
rate. These situations increase the use of domestic goods and increase the
demand of imported goods. These countries are not able to meet the
requirements of the increasing population.
The existing natural resources of the developing countries are depleting very
fast. These countries are not able to dig out new resources due to their own
limitations. In this way their exports of natural resources such as iron, gas,
copper etc. are coming down.
This is world of competition; developed countries are not allowing the
developing countries to come forward for competition due to highly
sophisticated technology.
Developing countries are often in a state of uncertainty; the political situation in
most of the time is disturbing the environment. Their economic policies are often
being changed. Due to this uncertain situation the domestic capital is going out
and no new investment is coming in, thus there is very small inflow of capital.
Developed countries are specialized in the production of those goods in which
they have comparative advantage to some other goods. But due to less resource
the developing countries cannot adopt this pattern.
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The Balance of Payment Problem in Developing Countries,
Especially in Pakistan
Developed countries sometimes in the form of a group are tightening the trade
restriction for developing countries. Sometime they are imposing different type
of tariff and quota restrictions. They can do so because they are powerful and
have an upper hand. Now World Trade Organization (WTO) has been setup
comprising 154 members of the world countries but there is again a doubt about
the working of WTO.
III.
Presentation of the BOP in Pakistan
There are two types of presentation of balance of payments used in Pakistan.
These are reported in Table I and II. Both contain the same information but
presentation is different.
Table I
Balance of Payments: 2000-2001
Trade Balance
Merchandize Exports (f.o.b)
Merchandize Imports (f.o.b)
Non-factor Services (Net)
Investment Income (Net)
Receipt
Payments
Private Transfers (Net)
(Workers Remittances)
Current Account Balance
Private Capital (Net)
Direct Investment
Other Long Term
Short Term
Public Capital (Net)
Long Term Disbursements
Less Repayments Long Term
Other Short Term and Long Term
Changes in Reserves
Errors and Omissions
Financing Accumulation of Arrears
Source: Pakistan Economic Survey-2002-03.
-1269
8933
-10202
-981
-2161
113
-2274
3898
(1087)
-513
-380
146
-214
-312
577
2302
1795
70
-1001
625
692
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- 41 Table II
Alternate Presentation of Balance of Payments of Pakistan: 2000-2001
Trade Balance
-1269
Services (Net)
8933
Exports
Imports
Receipts
Payments
Shipments
Investment Incomes of Foreigners
Others
Private Unrequited Transfers (Net)
-10202
-3142
1464
-4606
(877)
(2274)
(1455)
3898
Workers Remittances
Current Account Balance
(1087)
-513
Long Term Capital (Net)
171
Private Capital (Net)
Official Capital
Basic Balance
-68
239
342
Errors and Omissions
313
Balance Requiring Official Assistance
-29
Official Borrowings
338
Official Short Term Capital (Net)
Balance of Payments Borrowing
Changes in Reserves
431
93
1001
Financing Accumulation of Arrears
692
Source: Pakistan Economic Survey-2002-03.
Balance of Payment Situation of Pakistan
The balance of payment of any country is a crucial issue. Different
countries of the world solve this issue by determining the volume of trade and
investment between them. Similarly, Pakistan does the same. Surplus and deficit
are two major determinants for the BOP of Pakistan. The figures of the table at
Annexure-A show that Pakistan has been experiencing a consistently deficit in
BOP from the date of independence. On the one hand, its foreign exchange
earnings are very small and is limited to primary products, the market for which
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The Balance of Payment Problem in Developing Countries,
Especially in Pakistan
is unstable. On the other hand, the developmental programmes of Pakistan
require imports of equipments, machinery and so the burden of interest on
foreign capital exerts pressure on BOP. Pakistan’s exports mainly depend on
agriculture for which the natural conditions and environment in most of the time
is not favorable. At the time of draught and other circumstances the exports of
Pakistan fall sharply. As earlier told that developing countries usually export
their raw material and import the finished goods, so Pakistan’s export mostly
include raw materials, or primary goods, which being cheaper, fetch less foreign
exchange. In Pakistan major source for financing the balance of payments deficit
continued to be foreign loans. The situation will be more clear when we will have
a look on Pakistan’s trade from 1947 uptil now (Annex-A).
When analyzing the value of trade of Pakistan starting from 1947-48 we
see that there is almost trade deficit except at three places during the last 50
years; 1947-48, 1950-51 and 1972-73. The reason for surplus in 1947-48 was that
the exports of the newly Pakistan were quite high and non-devaluation decision
in 1948.
In 1950-51 the surplus figure was due to the Korean War when excess
export of cotton and jute [from East Pakistan which is now Bangladesh] turned
the deficit into a surplus. After the Korean war our imports exceeds exports so
there was a continuous deficit in trade for many years. In 1948-71, 99 percent of
United Pakistan’s foreign trade comprised of five primary commodities: raw jute,
raw cotton, raw wool, hides and skins, and tea. All jute and tea was exported
from East Pakistan. In 1971-72 again we had surplus trade balance of Rs.124
million. The reason behind this was the massive currency devaluation in 1972
when rupee was depreciated from Rs.4.76 to Rs.11 per dollar. The exports
increased significantly and share of exports in the GD rose to 14.9 percent. A
deep analysis has been done after 1972 i.e. after separation of East Pakistan in
1971. Starting from 1972 we see that the most important contribution to the BOP
has been the worker’s remittances, mainly from the Middle East countries. In
fact, for many years Pakistan’s trade and economy have been highly dependent
on money from the Gulf. This situation continues uptill 1981-82. Exports have
shown a healthy trend after 1982 but workers remittances have fallen. We can see
the worker’s remittances from 1972-73 onward at Annex-B. The huge gap in the
deficit in BOP of Pakistan was also due to the sharp decrease in the remittances
of the Pakistan’s working abroad which is very clear from the Annex B. Pakistan
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had relied for a number of years on this highly unstable source for financing its
growing imports and sizeable underlying deficit in external payments. From the
peak year of remittances that is 1982-83 when the total remittances from abroad
were US $2886 million, it decreases to US$ 2279.00 in 1986-87, US $1468 in 199192, US $9846 million in 1999-2000 and still have a decreasing trend.
Pakistan’s BOP balancing depends mainly on the export of agricultural
crops. The production of main crops in Pakistan can be seen at Annexure –C
where production of wheat, rice and cotton has been given from the year 1990-91
to 2000-2001. The only purpose to see, if some thing happens with these products
the BOP situation of Pakistan would be deteriorated. The deficit reached at the
level of Rs.33212 million in 1981-82 from Rs.24,264 million in 1980-81 as the
international market prices of Pakistan’s main export, cotton, crashed. We can
see that deficit increased from Rs.32, 832 million in 1990-91 to Rs.81,685 in 199293 while the production of cotton and rice was also declined during the same
years. In 1993-94 the deficit figure came to Rs.52,751 million from the last yeas
figure of Rs.81,686 million while the production of rice grew upto 3995
thousands tons for the year 1993-94 from 3116 thousands tons for the last year.
In the same way the deficit figure is oscilating around 80,000 million
rupees in 2000-2001 and we can see the decrease in production of wheat, rice and
cotton during the same year and this was due to the highly dry season and
shortage of water in Pakistan. In 1998-99 there was again a decrease in the
production of cotton help to bring deficit upto Rs.75622 million. This was also
due to the decrease in cotton prices at world level.
In Pakistan BOP deficit is also due to the heavy import of food grain. We
have to import foodstuff to feed our growing population. Our domestic
production of food grains is not matching our population growth. Imports
during 1988-89 increased as a result of import of food grains. If we see the import
figure in 1997-98 that was decreased to Rs.436,338 million from the level of
Rs.465,001 million was due to the bumper increase in the production of wheat
and sugarcane. This decline in import bill was also due to decline in oil prices
because of slow down of global economic situation. This was also due to the
completion of power project in the country, which starts power generation
resulting reduction in import of power generation machinery.
- 44 IV.
The Balance of Payment Problem in Developing Countries,
Especially in Pakistan
Causes of Balance of Payment Problem for Pakistan
As stated earlier Pakistan has been facing BOP problem since the
independence. Therefore, it has been under deficit since then. Some
statistical work has been done in the previous section. to see the real
picture. A brief description of BOP problems of Pakistan are given as
under:
Pakistan is an agro-based economy and its exports mainly depend on rice
and raw cotton. Whenever there is an international price shock or internal
draught situation the export situation of these agricultural products are affected
badly increasing the deficit gap.
The overall BOP deficit in Pakistan is being financed largely by foreign
credits, which increase our future debt, services liabilities and which would
cause strains on the future balance of payments.
The net private transfer in Pakistan consists of the home remittances of
Pakistani nationals abroad and this is a temporary phenomenon. Our economy is
dependent on this factor, which is external and uncontrolled.
Whenever there is some natural disaster such as floods etc. our economy
is badly affected and we cannot meet the requirement of improving the BOP.
Further more, law and order situation of our country is discouraging for the
foreign investors to invest in Pakistan. This situation has stopped inflow of
capital in Pakistan.
High population growth has been a hurdle and main problem in BOP of
Pakistan as this has been increasing the import bill of Pakistan for importing
foodstuff. On the other hand, we are not increasing our agricultural products
more than the population growth rate.
There is a lack of continuity in the government policies that is also
discouraging the foreign as well as local investors to start new projects or to do
new investment, which is stopping inflow of capital as well as increase the
domestic production.
Political instability is also one of the major hurdles to improve the BOP
situation of the country. This situation is very much disappointing
internationally as well as internally.
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Pakistan is always exporting raw material, which is giving very low price
as compared to manufactured goods that would be a little help to improve the
deficit in BOP. In addition to this the market for primary products is very
unstable. While importing of equipments and machinery for its developmental
programmes causes a burden of interest on foreign capital, thus exerts pressure
on BOP.
Pakistan being a developing country is not able to get different types of
big grants or aids from developed countries to start its developmental
programme. The developed countries and international financial institutions
helped Pakistan in small quantity and in pieces, which is not at all helpful to
improve the BOP situation of the country.
Proper pricing policies play an important role in the production and
export of agricultural commodities and Pakistan is very weak on this side. Here
the farmer is not covering his cost of production and remains in the situation of
uncertainty.
During recent years there is a substantial increase in the exports of
primary commodities, particularly rice and cotton and still there is a potential for
future increase and production of these commodities. In addition there is a wide
scope for increase the production of food grains, livestock, fruit and vegetables.
But the potential for increasing the production and exports of these products is
not being utilized properly.
Developed countries put restrictions on our exports in one-way or the
other. After the atomic explosion they have put us on trial. Some times they put a
restriction on our export due to under standard, then quota system or child
labour etc. which affect BOP situation badly.
Implementation of Fiscal and Monetary policies and Pakistani Tariffs on
exports and imports are not being implemented properly and with proper
knowledge, which is not improving the BOP situation in Pakistan.
The emphasis of Pakistan’s industrial policy has been more on import
substitution than on export expansion. This situation can increase the prices for
consumers and make these industries an inefficient. Unless this kind of situation
is not finished there will be a threat for BOP.
The Balance of Payment Problem in Developing Countries,
Especially in Pakistan
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Reducing the BOP deficit depends on our rapid industrial production and
quality of our products. In Pakistan we are under-utilizing the idle capacity of
our industrial production. Lack of knowledge about this situation is not in
favour of improving the BOP.
Pakistan is suffering from acute external and internal debt problems,
which is also one cause of deteriorating the BOP situation of Pakistan.
Policy measures for Reducing BOP Deficit in Pakistan
Various measures may be taken for improving the different components
of the BOP which are listed below:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Appropriate use of Fiscal and Monetary Policies, income and
wage policies, and exchange rate policies
Improving the domestic political environment and law and order
situation.
Measures to increase agricultural productivities and to maintain
appropriate price for agricultural produce and setting up of
agriculture based industries.
Facilitating the foreign investors in Pakistan with improved
infrastructural to increase export.
Encouraging the setting up of fruit processing industries
Encouraging the competitive behaviour of Pakistani investors
with rest of the world.
Improvement of R&D facilities and level of education in the
country.
Encourage Pakistanis to use domestic products, which will reduce
the import bill.
Exemption for exporters and domestic investors from excise
duties and sales taxes and encouraging the high value added
industries.
Arrangement of provision of credit to small and medium size
investors and farmers.
Allowing duty-free import of textile machinery and duty-free
import of other old machinery.
Setting up of more export processing zones in the country and
supplying infrastructural facilities for the investors.
The Journal of Commerce
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
- 47 -
Making arrangements for export of skilled manpower rather than
unskilled ones on high wages and setting up of polytechnic
colleges or institutes and training centers for the manpower going
abroad.
Opening up of saving schemes for low-income groups to
encourage savings out of their income.
Making arrangement to strengthen oil and gas and technology
sectors.
Financing the educational activities and improving the quality of
higher education.
Policies may be made to facilitate indirect exports and small and
medium enterprises and ban on any type of export may be lifted.
Exporter of all level may be educated about the latest international
rules and regulations to compete the international market.
Free import of high tech. Machinery such as computers may be
allowed.
Policy measures to face the debt problems of Pakistan, e.g., to
improve external debt, policy to increase country’s export may be
strengthened by developing the domestic production.
Restoring the donor’s and investor’s (both external and internal)
confidence.
Most of the producers, exporters and policy makers are not aware
of Uruguay Round Trade Agreement on Agriculture. There is an
urgent need to pursue public awareness program on the impact of
trade liberalization on agriculture, including trade policy
developments, priorities and strategies of the major trading
partners of Pakistan.
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The Balance of Payment Problem in Developing Countries,
Especially in Pakistan
The Journal of Commerce
- 49 Annexure -B
Workers Remittances
(US$ million)
Year
Total
1972-73
1973-74
1974-75
1975-76
1976-77
1977-78
1978-79
1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1996-97
1997-98
1998-99
1999-2000
192000-2001
1991-92
136.00
212.00
334.00
578.00
1156.00
1358.00
1744.00
2116.00
2225.00
22886.00
27737.00
2446.00
2595.00
2279.00
2013.00
1897.00
1942.00
1848.29
1467.48
1562.24
1445.56
1866.10
1461.17
1409.47
1489.55
1060.19
983.73
854.60
Source: Government of Pakistan, “Pakistan Economic
Survey” Statistical Appendix (many issues).
- 50 -
The Balance of Payment Problem in Developing Countries,
Especially in Pakistan
Annexure -C
Production of Main Crops
(000 tons)
Cotton
Years
Wheat
Rice
(000 bales)
1990-91
14565
3261
9628
1991-92
15684
3243
12822
1992-93
16157
3116
9054
1993-94
15213
6995
8041
1994-95
17002
3447
8697
1995-96
16907
3996
10595
1996-97
16651
4305
9374
1997-98
18694
4333
9184
1998-99
17856
4676
8790
1999-2000
21079
5156
11240
2000-2001
18535
4803
10732
Source: Pakistan Economic Survey – various issues.
The Journal of Commerce
- 51 -
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Startz,