When there is a deficit, a country has to adopt various methods to correct it. The methods that can be applied include:
(a) Export promotion: One of the best way to promote export is to provide subsidies
to exporters and applying tax exemption and trade fairs. These can encourage
and empower the exporters, and with more production and export the disequilibrium can be reduced or corrected altogether.
(b) Reducing expenditure
on
imports: This can be done by imposing high import
tarrifs, thus importation of goods will be reduced thus domestic goods will have to be more production of domestic goods, the outflow
of
the government funds will be
reduced.
(c) Devaluation policy: The reduction of currency
is made in order to promote exports and discourage imports, as when a currency is devalued exports become cheaper while imports become more expensive.
(d) Increasing production: In this, the production of export goods is increased hand
in hand with the increase of the production of goods which would otherwise
be imported.
(e) International cooperation: International organizations such as IMF, the World Bank and the World Trade Organization, can help to correct the balance of payment through aids, grants and loans.