Ways of Correcting Deficit or Unfavourable Balance of Payment
1. Borrow short term loans from IMF to service trade areas
2. Improving foreign exchange earnings by encouraging export
3. Reduce importation by introducing instruments of barriers to trade like quotas, tariffs, licensing, etc.
4. Encourage infant industries
5. Devaluation
6. Obtaining grants from friendly nations
Balance of Payment Deficit can be Financed Through the Following Means
1. Short-term borrowing from abroad e.g. World Bank, IMF, etc.
2. Importing goods on credit
3. Using up foreign exchange reserveForeign exchange reserves are assets in foreign currencies that are held on reserve by a nation's central bank. These reserves are used as backup funds if their national currency rapidly devalues.... More
4. Selling foreign investment
5. Encouraging export and discouraging import substitution process
How balance of Payment Disequilibrium is Adjusted
1. Stimulation of export
2. Deflating the currency
3. Borrowing
4. Devaluation
5. Sales of foreign exchange
Responses