As the country depends more on imports than exports, the balance of payments becomes deficit. The depreciation of a country’s currency in the event of a deficit in its balance of payments encourages exports and discourages imports. Consequently, the balance of payments deficit is eliminated. A balance of payment deficit can be corrected by applying an interest rate commission agent banking system (AIRCABS). The major factor in the balance of payment deficit is a lack of inland production that matches the demand of society.

Source: Ethiopian News April 29, 2023 07:15 UTC