Presentation on:

FISCAL POLICY
Presented to: Mr. Junaid Ahmad Kiyani
Presented by: Aleeza Nazar
Ayesha Sajid
Rizwan-ul-Haq
 Table of Content:
 Fiscal policy
 Procedure
 Purpose
 Application tools
 Most recent Fiscal Policy of Pakistan
 Fiscal Policy
 The word fisc means “ state treasury” and fiscal policy refers to policy concerning the use of “state
treasury” or the govt. finances to achieve the economic stability
 Fiscal policy involves the decisions that a govt. makes regarding collection of revenues , through
taxation and about spending that revenue
 Fiscal policy is defined as;
“It means by which a govt. adjust its spending levels and
tax rates to monitor and influence a nation’s economy.”
 Procedure of the Fiscal Policy
When govt. has increase the money supply in the country due to deflation in the country, govt. uses
Expansionary Fiscal Policy.
Deflation Expansionary Fiscal Policy
less money in the market Reduction in taxes
low prices Increase in govt. expenditure
low aggregate demand
Low income / disposable money
Increase in investments
increase income/ disposable money
higher aggregate demand
increase in price level
 Procedure of Fiscal Policy
When Govt. has to decrease the supply of money in the country, due to inflation in the country,
govt. uses contractionary fiscal policy.
Inflation Contractionary Fiscal Policy
High money supply in the market Increase in taxes
High prices Decrease in govt. expenditure
High aggregate demand
Increase in income / disposable money
Decrease in investments
Decrease income/ disposable money
Lower aggregate demand
Decrease in price level
 Neutral Fiscal Policy
 This type of policy is usually undertaken when economy is in equilibrium.
 Government spending is fully funded by tax revenue, which effect on the level of economic
activity.
 Purpose of Fiscal Policy:
 Economic Stability
 Full employment
 Price stability
 Accelerating the rate of economic development
 Equitable distribution of income and wealth
 Encouraging investment
 Application Tools of Fiscal Policy:
Main two tools of application of fiscal policy:
 Taxes
 Government expenditure / spending
 Transfer payments
 Taxes:
 Main tool government uses to collect money from public
 Income tax, sales tax, other indirect tax.
 Without taxes, govt. would have little room to collect money from public
 Government Expenditure:
 To ensure economic growth, the govt. needs to spend money on different
projects
 Purchases of goods and services
 Transfer Payments
 Transfer payments includes things like Social Security, welfare or
unemployment checks
 These are the tools of fiscal policy increases the income of the people
 It acts as the same way as the tax because it effects the income of the people
 Fiscal Policy of Pakistan
 Outlay of budget 2020-21 is Rs. 7,294.9 billion.
 Resources availability during 2020-21 has been estimated at Rs. 6,314.9 billion
 Net revenue receipts for 2020-21 have been estimated at Rs. 3,699.5 billion
 Net capital receipts for 2020-21 have been estimated at Rs. 1,463.2 billion
 External receipts in 2020-21 are estimated at Rs. 2,222.9 billion
 Fiscal Policy of Pakistan
The govt. priorities for the next fiscal year are;
 Inclusive and sustainable economic growth
 Pro-poor initiative and social safety net through Ehsas program's
 Increased development spending for more job creation
 PM’s initiative Kamyab Jawan and Kissan Program’s
 Impact mitigation of COVID_19
 ANY
QUESTION