Learning Point

  Deficit Financing Definition: Deficit financing refers to the method used by the government to meet budget deficits (when expenditure is greater than revenue) by: Borrowing from the central bank Printing new currency Borrowing from domestic or foreign sources Formula: Government Expenditure – Government Revenue = Budget Deficit Government covers this deficit through deficit financing . Why Do Governments Use Deficit Financing? To promote economic development For public welfare programs To finance development projects (roads, hospitals, schools) To cover emergencies such as floods, wars, pandemics Effects of Deficit Financing Positive Effects: Boosts economic activity Increases employment Helps in infrastructure development Negative Effects: Leads to high inflation Increases public debt Causes depreciation of currency Reduces investor confidence ...

  1. Low Economic Growth Problem: Pakistan’s GDP growth remains unstable and low due to political uncertainty, weak industrial performance, high inflation, and low investment. Solutions: Ensure political stability and continuity of economic policies. Promote industrialization, especially export-oriented industries. Improve ease of doing business to attract foreign and local investment. Encourage public–private partnerships for mega projects. 2. High Inflation Problem: Prices of essential goods increase rapidly, reducing the purchasing power of the public. Causes include supply chain issues, currency depreciation, and dependence on imported fuel and food. Solutions: Strengthen price monitoring and control mechanisms. Increase agricultural productivity to reduce food shortages. Promote renewable energy to reduce fuel imports. Stabilize exchange rate through improved foreign reserves. 3. Unemployment Problem: Million...

  1. Introduction The economy of Pakistan is currently navigating a highly challenging environment, marked by structural vulnerabilities, macro-economic stabilization efforts, external pressures, and significant reform imperatives. These lecture notes aim to provide an overview of the current economic conditions, highlight key sectors and indicators, identify driving forces and constraints, and project possible future pathways. Examples, data and context are drawn from the latest available information to make this relevant for your students.   2. Key Economic Indicators & Current Status 2.1 Growth & Output Pakistan’s gross domestic product (GDP) in current US$ is around US$ 373 billion (2024 estimate). ( World Bank Open Data ) For the fiscal year 2024-25 the economy’s growth rate is reported at 2.7%, missing the government target of 3.6%. ( Business Recorder ) The previous year growth was ~2.5%. ( Reuters ) The agric...