Why is a persistent deficit in the balance of payments undesirable? What policy measures are available to achieve an improvement in a country’s BoP?

A persistent deficit in the balance of payments (BoP) refers to a situation where a country's payments for imports, outflows of capital, and other foreign obligations exceed its receipts from exports, inflows of capital, and other foreign sources of income over an extended period. Such a deficit can have several undesirable consequences for an economy. Let's explore why a persistent deficit in the balance of payments is considered undesirable and discuss policy measures that can be implemented to achieve an improvement.

1. Economic Vulnerability: A persistent deficit in the balance of payments makes an economy vulnerable to external shocks. It implies that the country is relying heavily on external borrowing or depleting its foreign exchange reserves to meet its obligations. This reliance ____ _______ ______ __________ ______ _______ _________ ____ _________.
_______ ______ ________ ___ _________ ___ _________ ______ _________ __________ ______ _____.
__________ ______ _____ ________ ___ ______ ________ ___ ______ __________ ___ __________.
____ _______ _________ _____ ___ ___ __________ ___.
___ _____ ____ ______ ______ _________ _______ _________ _________ ____ _____ ____.
______ __________ ______ ___ __________ ________ ________ _________ ___.
_________ ________ ____ ______ _________ ___ ___ ________ _________ _______.
_____ ____ _________ _____ ____ ______ ____ _________ __________ ________.
___ _____ ________ ____ __________ ________ ______.
____ ______ ___ __________ __________.
__________ ________ _________ ____ ___ ______.
_________ ______ _____ _______ __________ ___ _______ ________ ___ _____.
_______ __________ ________ _________ _____ ______ __________ _____ ___ ______ ___ _______.
______ __________ ________ _______ ________.
_____ ___ ____ _____ _________ ______ ____ __________ ______ __________ ________.
_________ ___ ____ ____ _________.
__________ ____ _____ ____ ____ ______ __________ _________ _____ ________ ______.
_______ __________ ______ _______ _____ ___ ______ ____ ___.
_____ ________ ______ _________ ____ _____ _________.
__________ _________ _______ _________ _______ _____ __________ ____ _____ ___ _________.
______ ______ ___ ______ _____ ___ _____ ________ ______.
________ ______ _____ _____ _________ _____ _____ _________.
_______ _____ ________ _____ ________ _____ ________ __________ ________ _______ ___ ____.
______ __________ __________ _____ ____ ________ _______ ___ ________ _______ _____.
________ ____ __________ _________ ____.
_________ __________ _______ _______ ____ ___ ________ ________.
_______ ____ ______ ___ __________ ______ ________.
__________ ___ _________ ___ _____ ________ _________.
_______ __________ ______ ________ ________ _____.
____ ________ ___ ______ ______ ______ ______ _______.
______ __________ __________ ____ ____.
________ ________ _____ _________ _________ _______ _____.
____ __________ _______ ____ ________.
______ ____ ____ _________ _______ ____.
___ _____ _______ ___ _____ ______ ______.
________ _____ ______ ______ ______ ______ ____ ____.
____ ______ _____ _____ ________ _____ ____ ________.
__________ _____ ______ _______ _______ ______ _________ ________ __________ ____ _____ _______.
_______ ____ __________ ___ _______.
_________ _________ ______ ______ ____ ________.
______ ________ __________ ______ _______ _________.
_____ ________ ________ ________ _________ __________ __________ __________ _____ ____ ______.
________ ______ ______ _____ __________ _________ ________ _____ __________ _______.
________ ________ ______ ______ _______.
_______ ___ ________ _____ _______ _______ __________ ____ _____ ____.
_______ _______ ___ ____ _________ ________ _____ _________.
____ ___ _________ _________ ______ _________ _______ ______ ______.
__________ ________ _______ ___ __________ ____.
___ ____ ______ __________ ___ ___ ________.
____ _________ _________ _____ ______ ________ __________ _________ _______ ____.
_______ _____ ______ _________ ______ ____ ______.
___ ______ _____ ____ _______.
___ ___ _________ _____ ____ _________ ______ ______ ___.
______ ___ ____ _________ ____.
________ ______ _________ ________ ___ ____ __________ ___ _____.
_______ ____ ___ ____ ____ ______ ______ ______.
______ ____ _______ ____ ______ __________.
___ __________ _________ _____ ______ _________ __________ ____ ______ ______ _____ _______.
_____ ______ __________ __________ ____.
___ _________ _______ ____ _________ _________ ____ _________ ____ ___.
________ ___ _________ _____ _______ _______ ______ ________ ________ __________.
_________ ______ ____ _____ ________ _________ ___ __________ ____ _________ ______.
_____ __________ ___ ______ _____ ______ _____ ______ _____ _____.
__________ _________ ______ _____ ________ ______ _________ ___.
_____ ______ __________ ____ ______.
___ _________ ______ _____ ____ ___.
___ ______ _____ ______ _________ _________ ______ ______.
____ _____ ___ _________ ____ ________ _____ _____.
_________ _________ _________ ___ __________.
__________ _________ ___ _________ ______.
_______ ____ ____ ________ _______ ________ _________ ___ _____ _______.
___ ___ _________ ________ ______ ________ _____ _____ _________ ________ __________ ____.
______ _________ _______ ____ __________ _____ ________ ___ _____ _______.
_______ __________ ________ ______ ________ __________ __________.
___ ________ ________ ______ ___ ____.
Get Full Answer on WhatsApp