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Why is it detrimental for a nation to have negative balance of payments? - Geography

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Question

Why is it detrimental for a nation to have negative balance of payments?

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Solution

Negative balance of payment indicates that for a country the expenditure on imports is higher than the income from exports. This implies that a country is running down on its stock of foreign exchange and it has to bank upon international loans for funding the payments of imports.

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History of International Trade
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Chapter 9: International Trade - Exercises [Page 90]

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NCERT Fundamentals of Human Geography [English] Class 12
Chapter 9 International Trade
Exercises | Q 2. (ii). | Page 90
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