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    Pakistan'S Fiscal Defecit: History, Causes and Effects

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    khanjiarab
    Pakistan has struggled with large and growing fiscal deficits that have hampered economic growth. The fiscal deficit as a percentage of GDP peaked at 8.8% in 2012 and has trended downward in recent years to 3.8% in 2017, though cuts have come more from development spending than austerity. Historical data shows the deficit fluctuating widely due to inconsistent fiscal policies and an inability to mobilize domestic resources and broaden the tax base. Large deficits contribute to high inflation, low growth, current account deficits, and crowding out of private investment and consumption in Pakistan.

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    Pakistan'S Fiscal Defecit: History, Causes and Effects

    Uploaded by

    khanjiarab
    64 views6 pages
    Pakistan has struggled with large and growing fiscal deficits that have hampered economic growth. The fiscal deficit as a percentage of GDP peaked at 8.8% in 2012 and has trended downward in recent years to 3.8% in 2017, though cuts have come more from development spending than austerity. Historical data shows the deficit fluctuating widely due to inconsistent fiscal policies and an inability to mobilize domestic resources and broaden the tax base. Large deficits contribute to high inflation, low growth, current account deficits, and crowding out of private investment and consumption in Pakistan.

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    fiscal deficit

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    Fiscal Deficit

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    Pakistan has struggled with large and growing fiscal deficits that have hampered economic growth. The fiscal deficit as a percentage of GDP peaked at 8.8% in 2012 and has trended downward in recent years to 3.8% in 2017, though cuts have come more from development spending than austerity. Historical data shows the deficit fluctuating widely due to inconsistent fiscal policies and an inability to mobilize domestic resources and broaden the tax base. Large deficits contribute to high inflation, low growth, current account deficits, and crowding out of private investment and consumption in Pakistan.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    64 views6 pages

    Pakistan'S Fiscal Defecit: History, Causes and Effects

    Uploaded by

    khanjiarab
    Pakistan has struggled with large and growing fiscal deficits that have hampered economic growth. The fiscal deficit as a percentage of GDP peaked at 8.8% in 2012 and has trended downward in recent years to 3.8% in 2017, though cuts have come more from development spending than austerity. Historical data shows the deficit fluctuating widely due to inconsistent fiscal policies and an inability to mobilize domestic resources and broaden the tax base. Large deficits contribute to high inflation, low growth, current account deficits, and crowding out of private investment and consumption in Pakistan.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 6

    PAKISTAN’S FISCAL DEFECIT

    HISTORY, CAUSES

    AND EFFECTS
    Introduction
     A sound fiscal position is an essential pre-requisite for
    achieving macroeconomic stability, which is increasingly
    recognized as a critical ingredient for promoting strong and
    sustained economic growth and lasting poverty reduction.
     A prudent fiscal management can mobilize domestic savings
    increase the efficiency of resource allocation and help meet
    development goals.
     A lax fiscal policy on the other hand, can lead to higher
    inflation, higher interest rates and crowding out of private
    investment, all of which Hamper growth and poverty
    reduction.
    Introduction
     The problem of Fiscal Deficit is one of the major causes for the stunting of
    economic growth in many developing countries around the world. These
    countries’ inability to deal with crippling deficit leads to debt financing,
    which leads to an inability to mobilize domestic resources, a relatively
    narrow tax base, and an inflexible tax structure.

     Like most developing countries, a large and growing fiscal deficit in


    Pakistan is one of its major outstanding economic problems. It is held
    responsible for high inflation, low growth, a current account deficit and
    crowding out of private investment and consumption.
    HISTORICAL PERSPECTIVE
    Following table and bar diagram provide an intuitive insight into the issue of budget
    deficit.

    Fiscal Deficit as a percentage of GDP from the year 1990 to 2017 is used to construct
    the table and the diagram.

    One intuitive insight by just taking a look at the chart is the ups and downs in the
    deficit relative to GDP that suggest among other factors gross inconsistencies in
    fiscal policies over the course of different fiscal years.

    However the deficit is hinting on a downward trend during the last four years
    implying that the government is giving in to the IMF regime requirements, though,
    more on the cost of cutting down on development instead of austerity measures.
    Fiscal Indicators as Percent of GDP
    Year Deficit Exp Rev
    1990 8.8 25.7 16.9
    1991 7.5 26.7 19.2
    1992 8.1 26.2 18.1
    1993 5.9 23.4 17.5
    1994 5.6 22.9 17.3
    1995 6.5 24.4 17.9
    1996 6.4 22.3 15.8
    1997 7.7 23.7 16.0
    1998 6.1 22.0 14.9
    1999 5.4 18.7 13.5
    2000 4.3 17.2 13.3
    2001 4.3 18.3 14.0
    2002 3.7 18.5 14.8
    2003 2.4 16.7 14.3
    2004 3.3 17.2 13.8
    2005 4.2 18.5 14.2
    2006 4.0 17.1 13.1
    2007 4.1 19.5 14.0
    2008 7.3 21.4 14.1
    2009 5.2 19.2 14.0
    2010 6.2 20.2 14.0
    2011 6.5 18.9 12.3
    2012 8.8 21.6 12.8
    2013 8.2 21.5 13.3
    2014 5.5 20.0 14.5
    2015 5.3 19.6 14.3
    2016 4.6 19.9 15.3
    2017 3.8 19.8 16.0
    Deficit As Percentage of GDP
    10

    9 8.8 8.8

    8.1 8.2
    8 7.7
    7.5
    7.3
    7 6.5 6.4 6.5
    6.1 6.2
    5.9
    6 5.6 5.5
    5.4 5.3
    Percentage

    5.2
    5 4.6
    4.3 4.3 4.2
    4 4.1 4.1
    4 3.7
    3.3
    3
    2.4

    Year

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