Importance of Balance of Payment
A balance of payment is an essential document or transaction in the
finance departmentas it gives the status of a country and its economy. The
importance of the balance of payment can be calculated from the following
points:
It examines the transaction of all the exports and imports
of goods and services for a given period.
It helps the government to analyze the potential of a
particular industry export growth and formulate policy to
support that growth.
It gives the government a broad perspective on a different
range of import and export tariffs. The government then
takes measures to increase and decrease the tax to
discourage import and encourage export, respectively, and
be self-sufficient.
If the economy urges support in the mode of import, the
government plans according to the BOP, and divert the cash
flow and technology to the unfavorable sector of the
economy, and seek future growth.
