pakistan economics

Information About the English Essay paper of PMS.
Total Marks are 100 Marks and Passing marks for this is 33
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khalidshah
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pakistan economics

Post by khalidshah » Wed Jul 18, 2012 11:51 am

AS the numbers start trickling in on last year`s economic and fiscal performance, the picture appears to get grimmer.Foreign direct investment fell by 50 per cent last year to just $800m, down from $5.4bn in 2007-08.Meanwhile, the budget deficit has clocked in at over eight per cent of GDP on the back of lowerthan-expected revenues and higher-than-projected expenditures. And yet, what is becoming clearer about the Pakistani economy is that rather than stark black and white there are many shades of grey, with the doomsday scenarios giving way to a more nuanced understanding of where the economy and the state of finances stand. To be sure, the picture is anything but bright. An outsize budget deficit is a significant problem but the absolute numbers can obscure the real threat.The bigger problem is that sources of inflows for the government are drying up and the cost of borrowing is going up. Rather than having a range of competitive avenues from which to borrow, focusing on highcost national saving schemes, private-bank borrowing and lendingfrom the State Bank has effectively mortgaged the future. Even the borrowing could have been justified if the money were spent on addressing deep problems in the power, water and infrastructure sectors. But that of course is not happening.Still, the economy appears to be limping forward, functioning on seemingly parallel tracks.While the public sector is weighing down the system, the private economy is pushing ahead, fuelled by remittances, growth in the livestock sector and the service sector in the urban areas many parts of which are outside the formal economy. The real question is when the mismanagement of the public economy will start to drag down the private, informal economy, triggering perhaps the meltdown that has been much talked about but thankfully deferred time and again the last few years.The answer, unfortunately, is that no one is really sure. While the bottom hasn`t fallen off from the overall economy yet, it still could. Idiot-proof as the overall economy may increasingly be seen as, there is no good substitute for sound economic and fiscal policies.


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