3. INTRODUCTION
• The term fiscal policy refers to the
expenditure a government undertakes to
provide goods and services and to the way in
which the government finances these
expenditures.
4. What is a Fiscal Policy?
According to Samuelson,
• Fiscal Policy is concerned with all those
arrangements which are adopted by the
Government to collect the revenue and make
the expenditures so that economic stability
could be attained/maintained without
inflation and deflation´
5. Objectives
• Mobilization of resources
• Acceleration of Economic growth
• Minimizes the inequalities of income and
wealth
• Increase the Employment opportunities
• Price stability
8. Budgetary surplus
• A budget is a detailed plan of operations for
some specific future periods
9. Government expenditure
• It includes:
-Government spending on the purchase of
goods and services
-payments of wages and salaries of
government servants
-public investments
-transfer payments
10. Taxation
•
Meaning : Non quid pro quo transfer of
private income to public coffers by means of
taxes.
Classified into
1. Direct taxes- Corporate tax, Div. Distribution
Tax, Personal Income Tax, Fringe Benefit
taxes, Banking Cash Transaction Tax
2. Indirect taxes- Central Sales Tax, Customs,
Service Tax, excise duty.
11. Public debts
•
Internal borrowings
1. Borrowings from the public by means of treasury
bills and govt. bonds
2. Borrowings from the central bank (monetized
deficit financing)
• External borrowings
1. foreign investments
2. international organizations like World Bank
& IMF
3. market borrowings
12. Role of Fiscal policy in economic
development of PAKISTAN
•
•
•
•
•
•
Capital formation
Increase the rate of investment
Encourage socially optimal investment
Economic stability
Counteract inflation
Flow of investment to socially desirable
channels
• Checks imbalance in various sectors
• Reduce inequality of income and wealth
