Economic Governance of Pakistan || Current Affairs || CSS/PCS/PMS

Economic Governance of Pakistan || Current Affairs || CSS/PCS/PMS

Economic Governance of Pakistan || Current Affairs || CSS/PCS/PMS

Economic Governance of Pakistan:

The decentralization plan was the cornerstone of the management agenda in 2000 who have delegated powers and responsibilities, including those related to social issues services, from federal and provincial governments to local levels. Development effort is directed at the local level through priorities set by selected local representatives, unlike bureaucrats sitting in provincial and federal capitals. Decentralization, deconcentration, accountability and participation of people in their local affairs could improve the provision of basic services to citizens at a basic level level. However, the transition created its own set of sprains and interference in particular as part of the performance of their duties to law and order and security which shifted power from deputy commissioners to an elected district Nazis.

This problem could be solved, but the abolition of the entire system designed in 2001 created a huge vacuum in providing basic services on upward. The next step was the separation of political and regulatory functions previously merged under the ministry. Regulatory agencies were ready for business affairs activities such as banking, finance, aviation, telecommunications, energy, oil, gas, etc. These regulatory structures are now independent of the ministry and are enjoying them quasi-judicial powers. The chairman and board members enjoy the security of ownership and cannot be arbitrarily deleted. They are not responsible to any executive body authorizes and organizes public hearings and consultations with interested parties. These regulatory authorities were not fully effective due to non-compliance the principle of placing the right person on the right job.

The National Bureau of Responsibility (NAB) was created on the basis of a new law framework as a major anti-corruption agency. A large number of high governments officials, politicians and businessmen were sentenced to prison high fines and disqualification from public office on charges of corruption after conviction by the courts. The main ones were overdue on loans and taxes investigations were carried out, prosecuted and forced to repay outstanding loans and taxes. However, subsequent actions taken in response to political purpose have diminished NAB image and violated its integrity. The primary cause of fiscal discipline had to be surgically removed will not happen again in the future.

The Fiscal Responsibility Act, which maintains control of the government the tendency to borrow him from difficult situations has been approved by parliament. The debt to GDP ratio should be reduced by 2.5 percentage points every year and cannot exceed 60 percent. Any deviations should be explained Parliament and needs its consent. However, this right was violated in the case last few years because there is no remedy in it. Restructuring and strengthening of the central bank and the banking sector also played a key role in economic recovery. State Bank of Pakistan (SBP) during formulation, remembered about price stability, financial stability and growth monetary policy, macro-prudential and development regulations initiatives that included a small balance and sometimes difficult compromises.

Because inflationary pressure did not appear at the beginning of the 21st century and in fiscal policy The Central Bank did not use leverage because of the heavy debt burden monetary policy providing a stimulus to revive the economy. Policy rates were successively reduced, which with a strong transmission mechanism translates into low interest rates on loans by banks. Private sector loan received, exists the capacity was fully utilized and new investments were made to expand production capacity. The period of expansive monetary policy has given great success increasing production and employment expansion. It was not until the beginning of 2005, when inflation increased expectations began to appear, monetary policy changed.

Instead of targeted credit, indirect market policy instruments were used to priority sectors. Limits on interest on loans and deposits and preferential treatment interest and exchange rates were removed from state-owned enterprises market interdependence was allowed. Credit Granting Decisions were made by an individual bank following prudential regulations without any central bank directive.

The middle and lower class consumers now use car loans, mortgages, credit cards, durable goods. Small farmers use bank loans for purchases chemical fertilizers, certified seeds, insecticides, small tools and rental tractor services. Small and medium entrepreneurs use bank loans for expansion their production and production capacities and modernization technology. Landless labor and poor women in rural areas receive microcredit for poultry, small farm animals, sewing machines etc. Number of households that have borrowed microfinance loans rose from almost zero to around three million.

Despite these changes in the early 2000s, recent banking experience loans are not very satisfying. The temptation to transfer funds to the government loans from manufacturing sectors were directed to finance the fiscal deficit in particular agriculture, SMEs etc. Aid for SMEs, agriculture and therefore, microfinance remains limited and does not develop at the desired pace especially in rural areas and backward districts. Financial inclusion has therefore they become a key area of  interest.

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