Stabilisation Policy vs. Growth-oriented Policy: Implication for the Pakistan Economy

Kaiser Bengali, Qazi Masood Ahmed


Pakistan has initiated a comprehensive reforms efforts aiming
at tracking the economy on a higher and sustainable economic growth,
reduce level of poverty, reducing unemployment, raising their level of
standard of living. These objective were to be achieved through a
programme that would build on the macro-economic stability which
encompasses structural reforms, trade liberalisation, privatisation,
fiscal reforms and financial sector. This paper makes one of the early
attempt to analyse the Pakistan stabilisation experiences. In Pakistan
the stabilisation programme was started in 1988-89. In this paper we
mainly examine the fiscal and monetary policy package since 1988 when
the Pakistan committed to a set of conditionalities under the Structural
Adjustment Programme of the IMF. The fundamental question that has risen
was the relative efficacy of stabilisation oriented versus growth
oriented policies on development and welfare. Admittedly, stabilisation
and growth are not mutually exclusive and any policy package has to
incorporate both the elements. However, the manner in which the policy
has been implemented in Pakistan has tended to pursue stabilisation at
the expense of growth.

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