Ways of correcting a balance of payments deficit
- External borrowing
- Devaluation and exchange depreciation; Devaluation raises the domestic price of imports and reduces the foreign price of exports of a country devaluing its currency in relation to the currency of another country.
- Trade restrictions to discourage imports.
- Use of foreign exchange reserves.
- Increasing domestic production through imports substitution industries
- Tight money policy and increased direct taxes to reduce disposable income
- Export promotion to increase export earnings
- Manpower development to reduce expenditure on expatriates
- Export diversification to increase export earnings.
CATEGORIES Economics
TAGS Dr. Bbosa Science
