Which of the following best describes the term lsquo import cover rsquo sometimes seen in the news ........

Economic Affairs Foreign Trade - Trends and Policy

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Which of the following best describes the term ‘import cover’, sometimes seen in the news?

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UPSC CSP Previous Year Paper (2016)

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It is the ratio of value of imports to the Gross Domestic Product of a country

It is the total value of imports of a country in a year

It is the ratio between the value of exports and that of imports between two countries

It is the number of months of imports that could be paid for by a country’s international reserves

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Explanation:

Import cover measures the number of months of money available in the national bank to cover the cost of imports or the stock of foreign exchange reserves in terms of months of retained imports of goods as at end of year. The measure helps in avoiding a BoP crisis, so that early preventive action can be taken.

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