Balance-of-Payments Crisis

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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For more than a year now, Pakistan has struggled to stave off a looming balance-of-payments crisis while its economy teeters due to low growth, soaring inflation, and mounting debt.
For more than a year now Pakistan has struggled to stave off a looming balance-of-payments crisis while its economy teeters due to low growth, soaring inflation, and mounting debt.
'The government was following various economic strategies such as managing the balance-of-payments crisis, fixing structural problems of the economy, and attracting foreign investment into the country,' Dr Abid Qaiyum Suleri, member of the Economic Advisory Council (EAC), told Arab News.
The package will enable Pakistan to deal with its balance-of-payments crisis.
While government officials hope that rising FDI will spur GDP growth and help the country crawl out of a recurring balance-of-payments crisis in the long run, some economists believe otherwise.
Muzzammil Aslam, former CEO of EFG-Hermes Pakistan, said the timely financial help of the UAE will help resolve economic problems of Pakistan in general and the balance-of-payments crisis in particular.
The finance ministry said last week the government was approaching the IMF for assistance to help stabilise the economy, amid a deepening balance-of-payments crisis.
The visit can have implications as Pakistan has yet to take a decision over a bailout given its balance-of-payments crisis.
The two-day trip began exactly one month after Imran assumed office, with Pakistan possibly seeking billions of dollars in assistance from allies as it seeks to avert a balance-of-payments crisis.
Pakistan is on the verge of a balance-of-payments crisis, which threatens the stability of its currency and its ability to repay debts or pay for imports.
The budget deficit has grown constantly pushing country on the verge of a balance-of-payments crisis threatening political and economic stability, the value rupee, ability to repay debts or pay for imports while the US is using the opportunity to squeeze Pakistan which is uncalled for.
"Usually, when some currency is at risk, the country has balance-of-payments crisis. In the past two months, the balance of payments in the Republic of Macedonia is surplus, and in the last five years we have significantly low deficit, lower than 2% GDP which is easily covered even in times of low level of foreign direct investments.