Fisheries Economics

6.3.4. Balance of payment

If a country exports more than what it imports then it is said to have favourable balance of trade. If the foreign exchange earned by a country through exports is more than what it requires to pay for various purposes including imports, then, the country is said to be having a favourable balance of payment (BOP). When the opposite happens, the country would not be able to pay for its imports and would slid into what is called the balance of payment crisis. It may then have to raise the required foreign exchange through other sources like loans which may bring economic hardships and other associated problems. When a country suffers from the balance of payment crisis over a protracted period, it may have to take loans from potential sources and consequently debt servicing may emerge as a burden. Therefore, export development is accorded top priority by all countries.