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WELCOME

IN THE NAME OF ALLAH, THE MOST BENEFICENT


AND MERCIFUL
Group Members
Nadia Akram (25)
Nimra Akram(29)
Sidra Ameen (56)
Maryam Noor(62)
Maheen Akram(72)
Aqsa Maryam(73)
Key Points

 Fiscal Deficit A s (%)GDP


 Federal Tax Revenue
 Policy Rate
 Fiscal Policy

“Fiscal policy involves the decisions that a


government makes regarding collection of
revenue, through taxation and about spending
that revenue.”
 Concept of Deficit
Deficit:
“Total government expenditure is
more than government receipts.”
 Types of Deficit
 Budgetary Deficit: Total Expenditure – Total Revenue

 Revenue Deficit: Revenue Expenditure – Revenue


Receipts

 Fiscal Deficit: Total Expenditure – Total Revenue


(Excluding Govt Borrowing)

 Primary Deficit: Fiscal Deficit – Interest Payments


 Fiscal Deficit

 Definition:

“The difference between total revenue and total expenditure


of the government is termed as fiscal deficit. It is an
indication of the total borrowings needed by the
government. While calculating the total revenue,
borrowings are notincluded."
 Description
“The gross fiscal deficit (GFD) is the excess of
total expenditure including loans net of recovery
over revenue receipts (including external grants)
and non-debt capital receipts. The net fiscal deficit
is the gross fiscal deficit less net lending of the
Central government”
Fiscal Deficit Of Pakistan(2000-2018)
AS % Of GDP
Sr Years Fiscal Sr no. Years Fiscal Sr no. Years Fiscal Sr Year Fiscal
no. Deficit Deficit Deficit no. Deficit

1 2000 5.4 6 2005 3.3 11 2010 6.2 16 2015 5.3


2 2001 4.3 7 2006 4.0 12 2011 6.5 17 2016 4.6
3 2002 5.5 8 2007 4.1 13 2012 8.8 18 2017 5.8
4 2003 3.6 9 2008 7.3 14 2013 8.2 19 2018 4.4
5 2004 2.3 10 2009 5.2 15 2014 5.5

Decade wise Average(2000-2009) = 4.50 Mean = 5.278 Median = 5.3


Average year(2010-2018 )=6.14 Mode = 5.5 Source:
Economic Survey
 Tax Revenue
“Tax revenue is defined as the revenues collected from
taxes on income and profits, social security contributions,
taxes levied on goods and services, payroll taxes, taxes
on the ownership and transfer of property, and other
taxes".
Federal Tax Revenue(2000-2018)
Sr no. Years Taxes Sr no. Years Taxes Sr no. Years Taxes Sr no. Years Taxes

1 2000 13.4 6 2005 13.8 11 2010 14.0 16 2015 14.3


2 2001 13.1 7 2006 13.1 12 2011 12.3 17 2016 15.3
3 2002 14.2 8 2007 14.0 13 2012 12.8 18 2017 15.5
4 2003 14.8 9 2008 14.1 14 2013 13.3 19 2018 11.2
5 2004 14.1 10 2009 14.0 15 2014 14.5
 Decade wise Average(2000-2009) = 13.86
 Average year(2010-2018 )=13.68
 Statistics Comparison within Region
 Policy Rate
 Definition :
The policy rate is the key lending rate of the central bank
in a country. ... Some countries use cash reserve ratio
(China) or bank rate (UK) as the main policy rates to
influence credit growth.
Repo rate, or repurchase rate in the overnight LAF window,
is the fixed rate at which RBI lends to banks for a day.
 Repo Rate and Reverse Repo Rate
 Repo Rate: is the rate at which State Bank lends
money to commercial banks.

 Reverse Repo Rate: is the rate at which Stat Bank


borrows money from the commercial banks.

 Bank Rate: is the rate at which RBI allows finance to


commercial banks.
 Monetary policy
 Definition:
"Monetary policy is the macroeconomic policy laid down by
the central bank. It involves management of money supply and
interest rate and is the demand side economic policy used by
the government of a country to achieve macroeconomic
objectives like inflation, consumption, growth and liquidity."
 Types Of Monetary Policy
There are two types of monetary policy

Expansionary policy
Contractionary policy
 Expansionary monetary policy

 Expansionary monetary policy is when a


central bank uses its tools to stimulate the
economy. That increases the money supply,
lowers interest rates, and increases
aggregate demand policy.
 Contractionary monetary policy

 Contractionary monetary policy is a form of


economic policy used to fight inflation
which involves decreasing the money
supply in order to increase the cost of
borrowing which in turn decreases GDP
and increase inflation.
Policy rate (2000-2018)
Sr Year Policy Sr Year Policy Sr no. Year Policy Sr Years Policy
no. s Rate no. s Rate s Rate no. Rate

1 2000 14.5 6 2005 8.4 11 2010 12.3 16 2015 7.0


2 2001 13.5 7 2006 9.6 12 2011 14.0 17 2016 6.2
3 2002 14.5 8 2007 10.0 13 2012 12.0 18 2017 6.2
4 2003 8.4 9 2008 12.5 14 2013 9.1 19 2018 8.0
5 2004 7.5 10 2009 15.0 15 2014 10.0
Monetary Policy Case analysis:
 Monetary policy operates by influencing the pricing of
money i.e. ,the cost of borrowing and the income from
saving the State Bank of Pakistan sets the bank rate .this is
an interest rate for the State bank’s own .

 It will influence interest rate change overdraft and


mortgage as well as for saving account. A change in Bank
rate will also and share .
 Most Bank would try to compensate for the loss of income, by
adjustment in deposit rate to neutralize the impact on their
net interest income they would reduce the cost of fond and
also bring down the interest rate.

 This encourage saving to invest to spent the memory on


alternative like property and company shares any fall in
demand for there assets will reduce their price. Similarly the
significant fall in interest rate will result in higher stock
prices.

 In global market the exchange rate in influenced , both by


expectation about future interest rate and by and unexpected
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