Overview

financing gap


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The difference between a country's foreign exchange requirements, for imports and the servicing of its debts, and what it has available from export receipts and overseas earnings. This gap must be filled either by raising further foreign exchange (donor aid, loans, etc.) or by cutting back the requirements, either by reducing imports or rescheduling the repayment of debts. Forecasting the financing gap and negotiating means of bridging it are major elements in helping countries with balance of payments problems.

Subjects: Financial Institutions and Services.


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