Analysis of Pakistan’s Balance of Payment problem: Causes and Consequences

Abstract

A current account deficit happens when a country spends more on imports than it earns from exports. But when it can't finance the deficit or maintain enough foreign cash reserves, that's when a balance of payment crisis kicks in. This leads to falling currency value, debt defaults, inflation, and other economic troubles. Finding a way out means using smart policies to boost exports, attract foreign investments, and ensure macroeconomic stability. (Atish Rex Ghosh, 2017)