Fiscal Policy in Pakistan Since 1970
November 1, 1992
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Summary
The analysis in this paper suggests that the large fiscal deficits that Pakistan has experienced over most of the period since 1970 led to some crowding out of private investment, resulting in slower output growth than would otherwise have been observed. Past fiscal deficits have also resulted in a substantial accumulation of domestic and external debt. In addition, the possibilities for currency substitution that have been created by the removal of restrictions on capital flows from Pakistan, as well as on foreign currency holdings of domestic residents, may have limited the potential for collecting the inflation tax. Accordingly, continued effort is likely to be needed to attain a fiscal position that is sustainable over the medium term.
Subject: Economic sectors, Fiscal policy, Government debt management, Inflation, Prices, Public debt, Public financial management (PFM), Public sector
Keywords: capital stock, control in Pakistan, deficit control, deficit estimate, deficit increase, deficit ratio, deficit reduction, deficit reduction program, fiscal deficit, Government debt management, growth-adjusted deficit ratio, Inflation, Middle East, price level, Public sector, rate of inflation, reduction scenario, reduction strategy, trade balance, WP
Pages:
38
Volume:
1992
DOI:
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Issue:
097
Series:
Working Paper No. 1992/097
Stock No:
WPIEA0971992
ISBN:
9781451949506
ISSN:
1018-5941
Notes
Also published in Staff Papers, Vol. 40, No. 2, June 1993.
