Q-46 = Distinguish between balance of payments and balance of trade.
BALANCE OF TRADE AND BALANCE OF PAYMENTSBalance of Trade is a statement of imports and exports of goods. Balance of trade is usually against Pakistan. Pakistan’s exports earnings from raw cotton, textile goods, rice, leather and surgical products are very less where as expenses on imports of machinery, industrial raw material, petrol, and on electronic goods are greater. Pakistan receives less and pays more, which makes its balance of trade unfavorable.
Balance of Payments is always against Pakistan. It is a statement of a country’s trade (visible) and financial transactions (invisible) with the rest of the world. Since both the above balances are against Pakistan, therefore final balance of payments is also against it. This is being balanced by borrowings from World Bank, IMF and friendly countries. Unfavorable balance of payment increases the debt liability of Pakistan.
BALANCE OF TRADE AND BALANCE OF PAYMENTSBalance of Trade is a statement of imports and exports of goods. Balance of trade is usually against Pakistan. Pakistan’s exports earnings from raw cotton, textile goods, rice, leather and surgical products are very less where as expenses on imports of machinery, industrial raw material, petrol, and on electronic goods are greater. Pakistan receives less and pays more, which makes its balance of trade unfavorable.
Balance of Payments is always against Pakistan. It is a statement of a country’s trade (visible) and financial transactions (invisible) with the rest of the world. Since both the above balances are against Pakistan, therefore final balance of payments is also against it. This is being balanced by borrowings from World Bank, IMF and friendly countries. Unfavorable balance of payment increases the debt liability of Pakistan.