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| EconomyOfPakistan Home» Economic History of Pakistan » Prospects |
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Prospects of Pakistan's Economy |
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Backed by significant across the board growth in all productive sectors,the Prospects of Pakistan's Economy are very bright as the economic growth has surpassed the average economic growth. Aggregate demand pressures were at an all time high as the per capita income grew and public had easy access to low interest credit for almost 4 years in a row. The combined effect of this debt reduction and greater prudence in fresh borrowing coupled with GDP growth, helped reduce the external debt and liabilities. Aside from the decline in external debt, the external debt burden also fell as a consequence of the real cost of borrowing. With the pace of foreign exchange earnings gaining momentum, the country’s debt carrying capacity grew. At the center of all these developments was the pursuance of prudent monetary, fiscal and exchange rate policies.
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Despite these fiscal strains, key structural changes were notable in the Prospects of Pakistan's Economy. Aside from near elimination of the revenue deficit, prudent fiscal management helped reduce the share of interest payments in the total outlay. This in turn helped achieve primary surplus. Over the medium term, greater fiscal sustainability can only be achieved if there are more substantive tax reforms which extend the tax base beyond the corporate and professional tax payers. It is with this intention that the Government has now started to tax the financial services industry, though the agriculture sector and other services remain outside the ambit of the tax regime.
For more information about the Prospects of Pakistan's Economy, log onto our website, economyofpakistan.com.
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