What measures can be adopted to correct the balance of payment deficit?

      

Explain measures that can be adopted to correct the balance of payment deficit.

  

Answers


Maurice
(i) Reduce government expenditure outside the country to reduce outflow/ payment of foreign currency.

(ii) Attracting foreign investments to increase inflow of capital.

(iii) Diversifying production/ exports to capture different markets abroad thus increasing capital inflow.

(iv) Promoting exports through measures like customs drawback to increase the revenue got from exports.

(v) Controlling imports for example, imposing quotas to reduce the expenditure on imports.

(vi) Asking for aid/ grants from friendly nations and use them to finance the deficit.

(vii) Devaluation of local currency to make exports cheaper and imports more expensive.

(viii) Sell investments abroad to finance the deficit.
maurice.mutuku answered the question on July 18, 2017 at 08:38


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