Essay on Budget Deficit, Fiscal Stimuli and the Economic Recovery

Essay on Budget Deficit, Fiscal Stimuli and the Economic Recovery

Length: 1100 words (3.1 double-spaced pages)

Rating: Strong Essays

Open Document

Essay Preview

Budget deficit, fiscal stimuli and the economic recovery

Post budget debate is heating around the points if the economy is heading in the right direction and government has the capacity to deal with major economic challenges. It is true that the economy of Pakistan is passing through a critical stage and major road blockers to growth seem to be increasing unemployment rate, inflation rate, incidents of terrorism as a consequence falling foreign and local investment levels, and power shortage. Adding to the injury, the country is included in the list of top 5 most unstable countries, along with Iraq and Afghanistan, of the world.

Pakistan economy, undoubtedly, is caught in both the cost push and the demand pull inflation but it can be rescued if the government uses right policy mix. However, with over 80% of the available pool of money reserved for non-development expenditures (defence, interest payments, running of the federal government), Pakistani government seems to be running out of options to introduce any stimuli package in the FY 10/11. Contrary to that, the USA, the UK, Japan, China and India, were able to recover their economies through fiscal stimulus packages, however, Pakistani government decided to cut down spending on development projects which will likely slow down the economy further.

The fiscal stimulus package is normally designed for improving the infrastructure of the economy which in turn helps creates jobs, improves both income levels and standards of living. The construction industry which is normally the biggest beneficiary of such stimulus package grows with a multiplier effect creating thousands of jobs and stimulating demand of over 40 allied industries . In Pakistan’s case, the multiplier e...

... middle of paper ...

... tightened the hands of the government. Our dependency on the IMF and the World Bank is continuously increasing because Pakistan’s external account balance is under tremendous pressure. And to finance it, government has to seek help from the IMF-money, however, doesn’t come free but with conditions attached to it. To release our external accounts from any pressure, Pakistan has to make sure constant but increasing inflow of dollars to help build its foreign exchange reserves. That’s the only way available to come out of the ugly stick of the IMF. And to meet that goal, Pakistan must focus on increasing exports and home remittances-the two vital sources to earn foreign exchange. Foreign investment is and could be another important source to build foreign exchange reserves but it will unlikely improve until the current security situation in the country improves.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay about The Impact of Fiscal Deficit on Economic Growth

- Objectives The main objective of the study is to find out the impact of fiscal deficit on economic growth Secondary objectives are: - To find out the trend in Fiscal deficit and Economic growth - To find out the relationship between Fiscal deficit and Economic growth. - To find out the mean difference between the levels of Economic growth across the time period - To find out the mean difference between the levels of Fiscal deficits across the time period H1: There is a significant impact of Fiscal deficit on the Economic growth H2: There is significant relationship between Fiscal deficit and Economic growth H3: There is a significant mean difference between the levels of economic growth ac...   [tags: research, economy, statistics]

Strong Essays
1151 words (3.3 pages)

The Need for Fiscal Austerity Essay

- The idea of fiscal austerity brings about discomforting and delicate thoughts to every citizen of the world’s mind; these agitating thoughts include high cost of living, unemployment, and adverse hardship, amongst others. During the past few years of economic difficulty, many politicians, economists and financial experts, including George Osborne, the current Chancellor of the Exchequer in the UK have mentioned the need to change fiscal policies. He claimed the proper handling and management of these policies, was the only way of recovering from the long backdrop of economic growth – recession....   [tags: new fiscal policies for the UK]

Strong Essays
2137 words (6.1 pages)

Essay on The Budget Deficit in The United Kingdom

- 1 Introduction Of late, the discussion of budget deficit in the United Kingdom has been more rigorous than ever. Based on the latest publication by the National Statistics, in financial year 2009/2010, the public sector net borrowing was £122.4 billion. As compared to the figures in the same period of 2008/2009, this is a staggering £54.6 billion higher than that in 2007/2008. At the end of January 2010, the public sector net debt has amounted to £848.5 billion, which is equal to 59.9 percent of GDP of United Kingdom....   [tags: Fiscal Issues]

Strong Essays
1446 words (4.1 pages)

Use of Monetary Policy and Fiscal Policy During The Great Recession Essay

- How can monetary policy and fiscal policy greatly influence the US economy. Keynesian economics says, “A depressed economy is the result of inadequate spending .” According to Keynesian the government intervention can help a depressed economy through monetary policy and fiscal .The idea established by Keynes was that managing the economy is a government responsibility . Monetary policy uses changes in the quantity of money to alter interest rates, which in turn affect the level of overall spending ....   [tags: Monetary Policy, Fiscal Policy]

Strong Essays
1100 words (3.1 pages)

The Fiscal Deficit Crisis in the United States Essay

- The Fiscal Deficit Crisis in the United States Since the inauguration of George W. Bush as the president of the United States in January 2001, a series of issues and problems have appeared. President Bush created problems in education, finance, medicare, social security, as well as foreign affairs. In addition, he has turned a 500 billion dollar surplus into a 500 billion dollar deficit (“Historical Tables” 2004, 21-22). We must ask how he could do this. Were funds spent on improving education, social security, or healthcare....   [tags: Government Politics Political Bush Essays]

Free Essays
2028 words (5.8 pages)

Demand Management and Fiscal Policy Essay examples

- Demand Management and Fiscal Policy Fiscal policy is the manipulation of aggregate demand using taxation and or government spending. The government tends to make most of its fiscal decisions in the annual budget, usually announced in March of each year. However, there are a number of problems in using fiscal policy to control aggregate demand - one of the most significant is the problem of time-lags. 1. Time Lags Many aspects of fiscal policy have a delayed effect on aggregate demand. Changing the fiscal stance can take some time to achieve....   [tags: Fiscal Policy Interest Rates Essays]

Strong Essays
1016 words (2.9 pages)

Attention Deficit Disorder ( Adhd ) Essay examples

- Since the TOVA measures variables of attention, it is often used to aid in the diagnosis of ADD. Attention deficit disorder, or ADD, is a psychological illness in which the individual has trouble paying attention and staying on task. This issue is so prominent that it affects their day-to-day life. Moreover, there are many causes of the inability to pay attention. Such causes include, but are not limited to, boredom, neurological problems, and other psychological abnormalities (like ADHD). Attention Deficit Hyperac2ivity Disorder (ADHD) is distinguished from other disorders of attention in that ADHD involves three noticeable groupings of problems that may manifest together or individually....   [tags: Attention-deficit hyperactivity disorder]

Strong Essays
2011 words (5.7 pages)

Deficit Spending Must Stop Essay

- “Today I'm pledging to cut the deficit we inherited by half by the end of my first term in office" (Obama). This is the promise of President Barack Obama shortly after being elected to his first term in office as president. Currently, however, the United States (US) government is in a difficult situation concerning the national debt accumulation and the main problem of a continuously unbalanced budget producing this massive debt. The national debt is currently at $16.8 trillion and is ever climbing....   [tags: US Federal Deficit Spending]

Strong Essays
2606 words (7.4 pages)

Attention Deficit Hyperactivity Disorder ( Adhd ) Essay

- Attention Disorders are becoming more and more common around the world. In fact, a study carried of the United States in 2013 showed that up to 11 percent of children aged 4 to 17 have been diagnosed with Attention Deficit Hyperactivity Disorder (ADHD) at some point in their lives (Visser, 2014). With this significant amount of cases, it is imperative to have standardized tests that can help screen for and aid in diagnosis of the disorder. The Test Of Variables of Attention (TOVA) is a neuropsychological assessment that measures an individual’s attention while screening for ADHD....   [tags: Attention-deficit hyperactivity disorder]

Strong Essays
2226 words (6.4 pages)

Attention Deficit Hyperactivity Disorder ( Adhd ) Essay

- This world is filled with activity. There is always something going on in the world around us. But in a world filled with chaos, we manage to pay attention to what is most important in that moment. We are able to divide our attention in order to focus on multiple things at one time as well as select where we want to focus our attention. Imagine trying to focus on a conversation and your attention is snatched away by your thoughts of something else. Constantly. Imagine having loads of homework due by the end of the day but you are unable to complete one assignment because you can’t concentrate long enough to process your thoughts....   [tags: Attention-deficit hyperactivity disorder]

Strong Essays
1003 words (2.9 pages)