Balance-of-Payments Crisis

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Balance-of-Payments Crisis

A situation in which a sovereign entity has developed an unsustainable balance of payments deficit. That is, a balance of payments crisis occurs when so much money is flowing outside a country that it has difficulty borrowing to make up the difference. A balance of payments crisis becomes acute in circumstances like an exceptionally large budget deficit that lasts for an extended period of time or a default on interest payments on publicly-held debt. See also: 1998 Russian Financial Crisis.
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Our economy will remain in red unless dependence on oil is reduced and reliance on coal is increased as refusal of loans by IMF can create very serious balance of payments crisis and lead to undermining economic activities in country, he said.
In contrast, large oil exporters with deteriorating fiscal balances and weak macro policy frameworks are in a less favourable position, primarily Nigeria, Russia and Venezuela, which, in the worst case scenario, may be pushed into a balance of payments crisis (see our commentary dated 21 December 2014).
There appears to be some risk of financial contagion from a balance of payments crisis in Russia to other countries in Eastern Europe.
The Central bank restricted gold imports in early 2013 as India battled a balance of payments crisis that triggered a sharp decline in the rupee following the US Federal Reserve's announcement on scaling down its quantitative easing programme.
A voracious appetite for gold among Indian consumers has made the bullion the country's second-biggest import item after oil and was one of the principal factors in putting it on the brink of a full-scale balance of payments crisis last year.
During the balance of payments crisis with lofty credit bubbles and in the difficult phase, the Central Bank normally buys Treasury bills with the banks, prints new local currency worth quite a few billions, and thus drives import demand.
Billions of dollars in aid to Egypt from Gulf allies since Morsi's ouster have averted a balance of payments crisis and allowed the government to spend on economic stimulus plans.
Most importantly, Pakistan will encounter a serious balance of payments crisis.
htm) have promised more than $12bn in aid to help Egypt avert a fuel shortage and balance of payments crisis.
Egypt has received pledges of aid from several Gulf countries, including Kuwait and Saudi Arabia, expected to help the most populous Arab state avoid a balance of payments crisis and overcome fuel shortages that partly caused a wave of public anger against Mursi.
This is part of a policy to reduce external vulnerability that is resulting in a chronic balance of payments crisis.
Despite this risk to growth, we believe the country's strong public finances will help to protect it from a balance of payments crisis.

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