Balance of Payments Imbalance Caused by Petroleum Import

The research reported in this thesis was on “Impact Assessment of Balance of payments imbalance caused due to crude oil import”. The aim of the research was to examine effect crude oil import has on the macro-economic variables such as current account and balance of payments of Pakistan. The secondary data was collected mainly from the Internet and key text books regarding the effect of oil import on an economy. Minitab software was applied to analyze data for multiple regression and results were interpreted by usual principles of statistics. The findings suggested that high volumes of crude oil import does cause balance of payments imbalance and Pakistan has a very tendency of crude oil import. Lastly, implications for policy makers was made to reduce the dependency of oil import and alternative solutions were looked upon for meeting the energy requirements of the country.

The topic of my research is impact assessment of balance of payment imbalances caused due to crude oil import in Pakistan. Balance of payments is an overall record of all financial transactions that has occurred between the residents of one country to the rest of the world, at a particular point in time. Precisely, a nation’s balance of payments is a net total of a country’s current account and its capital account. The current account comprises of net trade balance in goods and services, net investment income and current transfers. Net trade balance is a nation’s exports minus imports. Net investment income is the interest earned from assets located abroad, while current transfers is the payments receipt of funding of the resident country to other countries. The capital account, on the other hand records acquisition or disposal of all non-financial assets.