2.  When people talk,
listen completely.
Most people never
listen.
Franklin Delano Roosevelt

3. THE QUALITY OF YOUR LIFE
IS THE QUALITY OF YOUR COMMUNICATION
~
BOTH WITH YOURSELF & OTHERS 3
March 18, 2013

4. Pakistan’s
Balance of Payments
Presentation
By
UniQue GrOup
MEMBERS
FAHEEM ASLAM ABRO (BS-COM)
DANISH MOHAMMAD (BS-COM)
SADAQAT ALI ODHO (BS-COM)
TOUQEER ALI MERANI (BS-COM)
BHAWAL KHOKHAR (M-COM FINAL)
RIZWAN ALI SOOMRO (M-COM FINAL)
BILAWAL MUGHAL (M-COM FINAL)
AMEER HAMAZA (M-COM FINAL)

5. How we have collected data
Reference
•Wiki pedia http://en.wikipedia.org/wiki/Balance_of_payments
•State bank of pk http://www.sbp.org.pk/publications/bop/index.htm
•Reserch paper of mr. ∗ Gulzar Ali, M.Phil Scholar, Department of
Economics, University of Peshawar.E-mail : gulzar_ali69@yahoo.com
reseacrch paper name Pakistan’s Balance of Payments as a Monetary
Phenomenon: (Econometric Evidence published in Journal of Managerial
Sciences 169 Volume V, Number 2
•Reserch paper of mr. M. Ashraf Janjua Institute of Business
Management, Karachi publised in PAKISTAN BUSINESS REVIEW JULY
2010
"A candle loses nothing by Lighting another candle"

6. INTRODUCTION
 What is BOP ?
 Basic concepts ,Why is it important ?
 Major components of BOP?
 History of Pakistan's BOP?
 Analysis of Pakistan's BOP (2003 to 2010)
 Conclusion ?
 Recommendations of uniQue grOup,


7. What is BOP ?
•Balance of payments is a summary transaction B/W
domestic and foreign residents for a specific period of
time.
•A systematic record of an economy’s transactions with the
rest of the world.
7

8. BOP…….
 an accounting record of all monetary
transactions between a country and the rest
of the world.
 BOP registers transactions between residents
and non-residents.
 BOP deals with flows
 BOP uses double entry accounting system.
 BOP are normally expressed in domestic
currency or in stable unit of account.

9.  Why is it important ?
The balance of payments are used for a country
and worldwide. The most frequent users are:
Domestic Economic Policy
Government authorities are constant users of balance of
payments and other statistics in carrying out their
responsibilities of monitoring economic activity,
formulating recommendations an appropriate balance of
payments and domestic economic policies and
evaluating various economic strategies.
To be conscious that you are ignorant is a great step to knowledge.

10.  Why is it important ?
International Uses
Regional balance of payments statistics are used by partner
countries to monitor developments in economic relations between
Pakistan and those countries or specific country grouping.
Pakistan’s balance of payments is used by academic and
business observers as well as by policy maker around the world in
monitoring developments in the worldwide payments position and
in comparative studies of trends in the balance of payments of
various countries.
BOP data is also used by international bodies such as IMF, World
Bank for funding ,loaning purpose and other external
stakeholders etc.
 "I hear and I forget. I see and I remember. I do and I understand."

11. Standard Components of BOP

12. Examples of Transactions
 Credit Transactions (+ve):
 Provision of goods and services to non-residents
 Income receivable from non-residents
 A decrease in foreign financial assets
 An increase in foreign financial liabilities
 Debit Transactions (-ve):
 Purchase of goods & services from non-residents
 Income payable to non-residents
 An increase in foreign financial assets
 A decrease in foreign financial liabilities

13. Basic concepts of BOP
 Trade – buying and selling of goods and services
Exports – a credit entry & Imports – a debit entry
Trade balance – the sum of Exports and Imports
 Factor income – repayments and dividends from loans and
investments
 Factor earnings – a credit entry
 Factor payments – a debit entry
 Factor income balance – the sum of earnings and
payments.
Trade deficit = export<import or import>export
Trade surplus = export>import or import<export
 If the debits exceed the credits, then a country is running a
balance deficit.
 If the credits exceed the debits, then a country is running a
balance surplus.

14. History of Pakistan’s Balance of payment
 independence on 14 Aug, 1947, currently facing a large balance of
payments deficit. to preserve an unwavering stability in the
balance of payments as one of the foundation objectives of
macroeconomic policy.
 The IMF and World Bank have been benevolent a great pact of
concentration to stable balance of payments situations in Pakistan
 The country with the exception of five years i.e. (1950-51, 1954-
55, 1955-56, 1958-59 and 1959-60) has been running a persistent
deficit in her current account

15. History of Pakistan’s Balance of payment…
 payment was in surplus of Rs. 578 crore in 1951-52, mainly due
to the Korean War , in the demand of two primary goods, jute
and cotton in the outside world. Due to increase in exports
 balance of payment in the year 1954-55 amounting Rs. 9.9
crore was marginal , due to devaluation of the rupee and
greater restrictions on imports
 surplus in its balance of payment from 1958-1960 due to the
introduction of bonus voucher scheme and placement of
restriction on import commodities
.

16. History of Pakistan’s Balance of payment…
 The deficit was Rs. 2.78 billion in 1972-73, rapidly mounting to
Rs12.78 billion in 1975-76, Rs. 25.84 billion in 1978-89, Rs.
30.05 billion in 1979-80 and Rs. 31.62 billion in 1980-81
 The current account deficit in the balance of payment for
the year 1996-97 was 3.28 billion dollars. It had been brought
down to 1.92 billion dollars during 1997-98 and 1.14 billion
dollars in 1999-2000.
 Pakistan’s current account balance was favorable from 2002 to
2004

17. History of Pakistan’s Balance of payment…
 it again slipped in to red in 2004-05 and 2006-07 due to higher
import bills of oil and import of machinery etc
 primary objective of Pakistan is to control and minimize the
deficit

18. Components of B.O.P
&
Graphically Analysis of Pakistan's BOP (2003
to 2010)

19. Standard Components of BOP
current account
I. Goods FOB Credit Debit Net

 General merchandise.
 Goods for processing.
 Repairs on goods.
 Goods procured in ports by carriers
 Non-monetary gold.

20. Standard Components of BOP- current account Contd…
 II. Services Credit Debit Net
 Transportation.
 Travel.
 Communication
 Construction
 Insurance
 Financial

21. Standard Components of BOP- current account
Contd…
 II. Services Credit Debit Net
 Computer and information
 Royalties and license fees
 Other business services
 Entertainment & Cultural and recreational
 Government services
“A single conversation with a wise man is better than ten
years of study.”

22. Standard Components of BOP-
 III. Income Contd… Debit Net
Credit
 Compensation of employees
 Investment income
 ► Direct investment
 ► Portfolio investment
 ► Other investment
 • Monetary authority
 • General govt.
 • Banks
 • Others

23. Standard Components of BOP- Contd…
 IV. Current transfers Credit Debit Net
 General government
 Other sectors
 ► Workers’ remittance .
 ► donations .
 ► gifts.

32. Standard Components of BOP- Contd…
V. Capital account Credit Debit Net
 Capital transfers
 General government
• Debt forgiveness
• Others
 Other sectors
• Debt forgiveness
• Others
 Acquisition/disposal of non-produced non-financial assets

34. Standard Components of BOP-
Contd…
VI. Financial account Credit Debit Net
Direct investment
 Direct investment abroad
 Direct investment in reporting economy
 Portfolio investment
 Portfolio investment – Asset
 Portfolio investment – Liability
 Financial Derivatives
"You are not only responsible for what you say, but also
for what you do not say.

35. Standard Components of BOP-
Contd…
 Reserve assets Credit Debit Net
 Monetary gold
 SDRS
 reserve position in fund
 Foreign exchange
 other claims
 Vii) errors and omissions: net produce to
preserve the balance of BOP
 Viii) exceptional financing

39. Conclusion
Through this Research it has been concluded that.
 Pakistan is facing many difficulties.
 Political Instability.
 Law and Order Situation
 Rapid flow of new currency
 High Inflation
 High Unemployment rate
 Continuous Restrictions of USA and other countries

40. Recommendations
 law and order stability.
 social and physical infrastructure
 energy resources
 improvement in macroeconomic stability

41. Recommendations….
 small scale industry.
 Establish a ceiling for the share of foreign
savings
 Pakistan badly needs foreign investment to
 competitive pressures for Pakistan’s textile
and clothing exports

42. Recommendations….
 overall production structure
 Policy attention needs to be focused on non-
textile
 Skill development and training
 Reduced tariffs, particularly on imported raw
material, imports,

43. By: UniQue Group