Worsening balance of payments


You are the chief executive officer of a multinational's subsidiary in a developing host country. The subsidiary has been in business for about eight years, making electric motors for the host country's domestic market, with mediocre financial results. Before you left the home country a month ago, you were told to make the subsidiary profitable or consider closing it.

After a month in the host country, you have discovered that it (the country in question) is running a worsening balance of payments (BOP) deficit and that the government's officials are very concerned about the situation. They are considering various measures to stanch or reverse the deficit flow.

What measures might be adopted? Can you think of some ways your company might profit from them or at least minimize the damage?

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Finance Basics: Worsening balance of payments
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