Document11

Slide 1: Title Slide

• Title: Pakistan’s Economic Fiscal Policies
• Subtitle: An In-depth Analysis

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Slide 1: Title Slide
• Economy of Pakistan: It's a semi-industrialized
economy, which mainly encompasses textiles,
agriculture, and various other industries

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• Key Financial Metrics: Including GDP growth,
inflation rate, and unemployment rate, which
provide a snapshot of the economic standing
• Importance of Fiscal Policy: Fiscal policy is crucial
in steering economic direction, controlling
inflation, and managing public expenditure

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Slide 2: Economic
Overview
• Key sectors: Agriculture, Textile, Services, IT,
etc
• Economic Challenges: Trade deficits, inflation,

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etc
• Include the most recent data available on GDP,
economic growth, per capita income, etc
• Current issues such as inflation rates,
unemployment, and the impact of global
situations

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Slide 3: Understanding
Fiscal Policy
• Fiscal policy refers to how the
government adjusts its spending
levels and tax rates to influence the

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economy
• Government Expenditure
• Taxation Policies
• Public Debt

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Slide 4: Government
Expenditure
• Segregation of spending: Defense,
Infrastructure, Healthcare, Education,
etc

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• Explore trends over time and the
impact of such spending on economic
indicators like GDP and employment

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Slide 4: Taxation
Policies in Pakistan

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1. Tax Framework
• Direct Taxes: Direct taxes in Pakistan
typically include income tax, corporate
tax, and wealth tax

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• Indirect Taxes: Indirect taxes encompass
sales tax, excise duty, and customs duty
• Provincial & Federal Taxes: Pakistan's tax
system is bifurcated between provincial
and federal levels, each with its
jurisdiction and mandates

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2. Challenges in Taxation
• Tax Evasion: A prominent challenge is extensive tax
evasion
• Inequality in Tax Burden: The heavy reliance on indirect
taxes, like the sales tax, tends to place a disproportional

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tax burden on lower-income groups, exacerbating
economic inequalities
• Complex Tax System: The complexity and bureaucratic red
tape in the tax system often discourage compliance
• Comparison with International Standards: Globally,
countries are adopting measures to enhance tax
transparency and prevent tax evasion, such as through
Automatic Exchange of Information and Base Erosion
and Profit Shifting frameworks

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 • Overview of Pakistan's Economy

• Economic Status: Pakistan is considered a developing

country with potential for significant growth
• GDP & Growth: Pakistan has experienced fluctuating GDP
growth over the past decade
• Foreign Exchange Reserves: Maintaining healthy foreign
exchange reserves has been a challenge due to
factors like trade imbalances and external debt
obligations
• Inflation and Unemployment: Inflation and

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unemployment have also been pressing issues, with
fluctuating inflation rates making macroeconomic

Slide 5: management challenging

• Textile Industry: The backbone of Pakistan’s economy,

Introduction to contributing significantly to its GDP and being a major

source of export earnings

Pakistan's
Economy
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 • Agriculture: Agriculture is a vital sector, employing a
large chunk of the labor force and providing raw
materials for several industries, including the textile
sector
• Services Sector: This sector, which includes finance,
insurance, transport, and communication, contributes
significantly to GDP and has showcased steady growth
• Information Technology: The IT sector has experienced
substantial growth and has started making a notable
mark on exports and employment generation

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• Manufacturing: Apart from textiles, the manufacturing
sector also encompasses cement, steel, and
automotive industries, which play a crucial role in
Slide 5: economic sustenance

Introduction to • Economic Stabilization: Fiscal policy helps stabilize the

economy by managing spending and taxation

Pakistan's
Economy
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Slide 5: Introduction to
Pakistan's Economy
• Managing Inflation: By adjusting spending and taxation, fiscal
policies can also help manage inflation levels, ensuring
they remain within a conducive range for economic growth
• Income Redistribution: Through taxation and public spending,

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fiscal policies can aim to redistribute income, attempting to
mitigate economic inequalities
• Encouraging Investments: By offering tax incentives and
subsidies, fiscal policies can encourage investment in
specific sectors, thus promoting economic growth and
development
• Debt Management: Fiscal policies enable the management of
public debt, ensuring it remains within sustainable levels
and does not hinder economic growth

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 1/19/25
Slide 6: Objectives
of Pakistan’s
Fiscal Policies
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1. Stabilizing the Economy
• Countercyclical Fiscal Policy:
Implementing policies that act counter
to the cyclical nature of the economy -

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spending during downturns and saving
during upturns
• Managing Externalities: Fiscal policies
help in managing external shocks, be it
from geopolitical events or global
economic fluctuations

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2. Managing Inflation and
Deflation
• Objective: Ensure price stability within the
economy, managing both inflation and
deflation through adept fiscal maneuvers
– Controlled Inflation: Utilize

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contractionary fiscal policies to control
excessive inflation without stifling
growth
– Avoiding Deflation: Implement
expansionary fiscal policies, like
increased government spending and
tax reductions, to spur demand and
avoid deflation

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3. Ensuring Sustainable
Economic Growth
• Investment in Infrastructure: Utilize
fiscal policy to finance infrastructure
development, enhancing the

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economic growth potential
• Supporting Key Sectors: Identify and
support sectors pivotal for growth
through subsidies, tax breaks, and
targeted investments

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4.Reducing Unemployment
and Poverty
• Job Creation: Enact policies that
encourage industries to create jobs,
such as providing incentives for hiring,

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supporting SMEs, and investing in
sectors with high employment elasticity
• Social Safety Nets: Implement fiscal
policies that strengthen social safety
nets, ensuring vulnerable populations
have access to basic needs and
services

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 1/19/25
Slide 7: Future
Trajectories &
Recommendations
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1. Fiscal Policy Moving
Forward
• Digitalization and Technology Integration: Pakistan’s
future fiscal policy may further embrace
technology, incorporating digital platforms and
methods into tax systems and public spending to

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enhance efficiency, transparency, and compliance
• Sustainable and Inclusive Growth: Policies might be
geared towards creating a more sustainable and
inclusive growth trajectory
• Addressing the Informal Economy: A significant portion
of Pakistan's economy is informal, which escapes
the tax net and thus, does not contribute to fiscal
resources

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1. Fiscal Policy Moving
Forward
• Climate Conscious Policies: As global trends move
towards sustainable development, Pakistan’s
fiscal policies may align more prominently with
climate-conscious goals, incorporating

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strategies that encourage environmental
sustainability
• Pakistan might use more technology in managing
its money, ensuring that economic growth
benefits everyone, trying to bring more
businesses into the official economy, and
considering the environment in its economic
plans.

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 • Broadening the Tax Base: To increase its revenues,
Pakistan should focus on expanding its tax net,
ensuring that all eligible entities are
contributing their fair share
• Enhancing Expenditure Efficiency: Ensuring that
public spending is yielding the desired
outcomes and is efficiently reaching the
targeted segments of the population or sectors
of the economy
• Investment in Human Capital: Allocating more

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fiscal resources towards education, health, and
skill development to enhance the productivity
and well-being of the population, fostering a
2. Policy capable workforce for future economic
challenges
Recommendation
s

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2. Policy
Recommendations
• Public-Private Partnerships: Fostering
collaborations between the government and
private sector to fund and manage projects,
particularly in infrastructural development

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and service delivery, to leverage the
strengths of both sectors
• Fiscal Prudence: Implementing strategies and
frameworks that prevent excessive borrowing
and ensure that any debt undertaken is
managed sustainably and utilized in
productive ventures

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 Policy in Simpler Terms

• Income : You need to ensure all earning

members are contributing
• Spending : Spending wisely - ensuring

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basic needs are met and some
investments are made for future
benefits
• Savings & Borrowings : Saving for tough
times and being cautious while taking
any loans to manage effectively

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