Advance Deposit Requirements for Imports in Pakistan

Mansoor Elahi
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Mansoor Elahi: Institute of Development Economics.

The Pakistan Development Review, 1962, vol. 2, issue 2, 215-228

Abstract: The system of advance deposit requirements for imports, as a means of improving the balance of payments, has achieved some popularity in recent years. Most frequently used in Latin America, this technique, in the form of margin requirements at the time of opening a letter of credit, has also been employed in Pakistan from time to time~ Advance deposit requirements serve as a selective credit corttrol instrument to raise the cost of financing imports and thus directly affect the ability and willingness to import. Under certain conditions, the requirement can also be an effective general instrument of monetary policy through its indirect effects on the supply and demand for liquid assets in the private sector. These direct and indirect effects may then reduce the demand for imports and thus improve the balance of payments of the country concerned.

Date: 1962
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