Sunday, September 20, 2009

Fiscal Developments

The large fiscal deficit in FY08 and the adverse economic consequences of its
financing from SBP placed fiscal consolidation at the top of government’s
macroeconomic stabilization agenda for FY09.
First Quarterly Report for FY09
9
Not surprisingly, the Q1-FY09 fiscal performance improved consequent to the
policy shift, with the overall fiscal deficit estimated to have dropped to 1 percent
of annual GDP. This is consistent with the annual fiscal deficit target set under
the IMF stabilization program. The reduction in fiscal deficit in Q1-FY09 was
brought about mainly by a drastic cut in development expenditures.

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