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Balance of Payments Policies
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| Submitted: Tue Sep 02 2003
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Theories Balance of Payments Policies Next theory - Interpreting the Balance of Payments>> In the case of an overall balance of payments deficit i.e. where the current and capital accounts are in deficit, LDCs such as Zambia have a number of policy options open to them. 1. Improve the current account balance by promoting export expansion or limiting imports or both. These objectives can be brought about by a number of measures: o Expand the export of copper and other primary commodities o Expand the export of secondary goods through adopting policies of import substitution o Introduce protectionist measures such as quotas, tariffs and other non-tariff barriers o Changing the value of the exchange rate through a devaluation or allow the currency to float and depreciate o Follow restrictive deflationary monetary and fiscal policy that reduces domestic demand and hence imports and reduces inflationary pressures in the economy 2. Improve the capital account balance...
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