Basically the balance of payment is the difference between the value of exports of a country and the value of imports of a country. For Pakistan, the current balance of payment represents a negative figure, which elucidates the fact that the value of Pakistan's imports is much greater than the value of Pakistan's exports. A very strong reason for this negative figure is the need for strengthening the industrial sector of Pakistan for which the import of capital goods is required, which forms a large part of Pakistan's exports. Another reason for this negative balance of payment is the fact that Pakistani goods do not have a very high demand in the market because of the lack of standardization in their products as well as the absence of quality control. Another source that increases the imports is the mindset of the public, which prefers imported goods to local goods. Lastly, it is the constant increase in oil prices that has led to the huge deficit in the balance of payment in Pakistan.
Pakistan is suffering from balance of payment deficit because of increased reliance on imported goods as compared to its domestic production. In the year 2008, the import bill increased by almost 35% of which 4.9 billion amount comprised of oil related imports. Pakistan is highly dependent on imported oil goods which it imports from foreign countries. The rising prices of oil commodities was one of the cause to give a downward push to its balance of payments. In spite of the strong growth in remittances and exports (accounted for 7.1 billion), it still had to suffer from negative balance of payments. Although Pakistan is an agricultural econonomy, but still it imports wheat, pulses, and basic necessity items from abroad. Depletion of pakistani rupee in the last year also posed a great problem for Pakistani economy.
Basically the main reason of a deficit balance of payment is because, goods that are being produced in pakistan has a lot of competition in the world market and pakistani goods are unable to compete with the excellent qualities of the international products, Since Pakistan itself is not producing high quality products so therefore even people of pakistan prefer to have imported goods rather than goods produced in Pakistan and therefore there is a lot of import but mainly imported goods contain oil related goods to fulfill pakistan's needs which is imported in large quantities which is unethical for the balance of payment of Pakistan, Pakistan's main exports are dependent on the agricultural goods which are also easily available in the neighbouring countries like bangladesh and India and indonesia etc, so even here Pakistan faces competition, Tourism in pakistan has also been declining due to the unpopularity and increasing of illegal activities even though Pakistan has tourist attraction but foreigners fear to come to Pakistan due to the negative stories they have heard and they deny to come to Pakistan so therefore Pakistan even suffers due to less tourists who bring foreign currency of theirs into a country
The biggest reason for budget deficit Pakistan experiences is because it's import bills exceed it's exports. Exports are foreign exchange earners and when we import it actually takes away our foreign exchange reserves thus creating a budget deficit. A major reason for the excessive imports is because of their unhealthy lifestyles. Almost 50% of the import bill comprises of edible oil alone, now that is an excess which can easily be avoided. On a micro level people tend to eat too much of greasy food. Besides being unhealthy it reflects very badly in Pakistan's annual fiscal reports. There are several other instances of such excesses. Besides that, Pakistan is not a very easy country to conduct business in. Almost all major industrial units are sick and closed. A mismanagement of resources and funds exists which further exacerbates the problem. The insecure economic air makes it harder for Pakistani businessmen to conduct businesses and are moving their investments to other countries.
