Submitted by:
Saqib Ameer
Roll no.
018
Submitted to:
Sir Asad Abbas
Assignment:
Pakistan Balance Of
Payment
Class:
BBA 2 year
Subject:
International Finance
Management
Introduction to Balance of Payments (BoP)
The balance of payments is a statement that summarizes an economy’s
transactions with the rest of the world for a specified time period. It includes
the country’s imports, exports, capital inflows, and outflows. Pakistan’s BoP
has seen considerable fluctuations due to its trade deficit and external
borrowing. The primary focus here will be on Pakistan’s major imports and
exports, and we’ll compare data from two recent years.
Data for Major Imports and Exports
For this assignment, I will focus on data for the fiscal years 2021-22 and
2022-23.
Major Exports 0f Pakistan ( USD BILLIONS)
Year Rice Surgical Sports Leather Textile Total
instrumen Good Goods Export
ts
2021- 2.5 0.38 0.34 0.50 19.33 31.5
2022
20222023 2.7 0.35 0.32 0.52 17.4 29.1
Major Imports of Pakistan (USD BILLIONS)
Year Petroleu Machiner Chemical Foods Electronic Total
m y s Imports
2021- 23.1 8.7 7.5 7.9 5.5 63.5
2022
2022- 22.3 9.2 7.2 8.1 5.8 62.6
2023
Graphs for Comparative Analysis
We’ll use two graphs:
1. Exports Comparison (2021-22 vs. 2022-23): A bar graph
showing exports of key items like textiles, rice, and others for both
years.
2. Imports Comparison (2021-22 vs. 2022-23): A bar graph
showing imports of major items such as petroleum, machinery, and
others over the two years.
Analysis of the Balance of Payments
From the data and the graphs, we can observe the following trends:
1. Exports:
Pakistan's exports saw a decline from 31.5 billion USD in 2021-22 to
29.1 billion USD in 2022-23.
The textile sector, which makes up the largest portion of exports,
experienced a decrease from 19.33 billion to 17.4 billion USD. This
drop could be attributed to a combination of global demand shifts,
rising competition, and local production constraints.
Rice exports increased slightly, indicating the resilience of Pakistan's
agricultural sector in this category.
Exports of other goods, such as surgical instruments and sports goods,
remained relatively stable, but the overall decline in textiles has had a
significant impact on total exports.
2. Imports:
Imports decreased marginally from 63.5 billion USD in 2021-22 to 62.6
billion USD in 2022-23.
The reduction in petroleum imports (from 23.1 billion to 22.3 billion
USD) was modest despite global price fluctuations, likely due to a mix
of price adjustments and local fuel policies.
Machinery imports rose, reflecting investments in infrastructure and
industrial projects.
Food item imports also increased, suggesting that Pakistan continues
to rely heavily on imported food due to domestic production
limitations.
Suggestions and Recommendations
1. Export Diversification:
Pakistan needs to diversify its export base beyond textiles to reduce
vulnerability. Developing sectors like information technology (IT),
pharmaceuticals, and high-value agriculture (fruits and vegetables) can
help balance the trade deficit.
2. Improving Industrial Efficiency:
Investments in technology and infrastructure can help boost the
efficiency of the textile sector, which remains the backbone of
Pakistan's exports. Modernizing factories and improving labor
productivity could restore the sector's growth.
3. Substitute Imports:
Reducing dependence on petroleum and food imports is crucial.
Investment in renewable energy and local food production can help
address this issue over time.
4. Policy Support for Exporters:
Government policies that support exporters, such as subsidies for raw
materials and simplified tax structures, would be beneficial in
increasing competitiveness in the global market.
