Sunday, January 2, 2011

High fiscal deficit real cause of economic challenges

High fiscal deficit real cause of economic challenges

ISLAMABAD: Renowned economists on Thursday said it’s a testing time for Pakistan’s economy having large fiscal deficit (root cause of all economic problems) with huge debt services, unemployment and poverty – whether it manages to ride out tough times.

Dr Ashfaque Hassan Khan from NUST Business School, Islamabad expressed these views at a three-day conference on 26th annual general meeting of Pakistan Society of Development Economics (PSDE).
He said massive debt has crowded out the private investment and slowed growth in the presence of persistent double-digit inflation over a long time. He emphasised that it’s a high time that government should keep the budget deficit low and maintain financial management. He further hailed the 7th NFC award as a success of democratically elected parliament. On average, he said the fiscal deficit remained 6.3% of the GDP in the last three years. He termed this high magnitude of fiscal deficit as “mother of all economic woes” that has caused a serious economic crisis.
Dr Akmal Hussain speaking on the subject “Macroeconomic Management in Decentralized Set-up” said that short-term recession decreases the government revenues, increases poverty and unemployment and eventually leads to changes in the composition of the federal revenue.
“Macroeconomic management is a strategic channel that could lead to equitable and sustainable growth by improving service delivery to the people in a cost effective way,” he said.
Dr Ijaz Nabi highlighted the importance of 7th NFC award in addressing the political issues in uniting the country. He also pointed out the importance of the NFC awards in the provision of quality service delivery to the people. This eventually would go a long way in strengthening the capacity of the provinces and thus contributing to the overall better economic management of the country.
Taking part in the discussion, William Baldridgde highlighted the importance of accountability and assessment of the provincial authorities. He particularly identified that the shortcomings in human resources should be addressed to strengthen the institutions.

Dr Javed Hamid stressed upon a judicious macroeconomic management and decentralized environment. He identified Macroeconomic stability, human resource development, and efficient use of public resources as key parameters in overall better economic management.

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