Embracing Uncertainties

A higher FY21 fiscal deficit is expected, at least the way things are poised now, landing at least around this year’s provisional deficit of 9.1% (which itself, given historical trends, could be revised upwards), if not higher. In such circumstances it is natural to assume that government debt levels will rise. Furthermore, given that 3/4th of the deficit financing is planned to be sourced domestically – not to mention the sheer size of the financing required – bond yields should remain sticky in the coming year.
Apart from some tariff rationalisation to support exports, the broader budget honestly seems to more or less echo the last one. It wouldn’t be entirely wrong to say that it raises more questions than it answers.  Read More…

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The Islamabad Policy Institute (IPI) is a nonpartisan, independent policy research institute based in Islamabad. Our goal is to undertake in-depth analysis of challenges and choices confronting Pakistan. We aim to help policymakers and public better understand the world, region and Pakistan-specific challenges and opportunities. We make efforts to engage government, civil society, private sector, media, academia in open debates and dialogue on the most significant developments in national and international affairs. We envision contributing to policy-making through periodic policy-papers putting forward policy-recommendations developed in collaboration with experts and stakeholders in each area. IPI takes no institutional position on policy issues.

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