Pakistan: making a “COVID budget” in a struggling economy

Abstract

Purpose

The purpose of this study is to examine the fiscal measures undertaken by the Pakistani government to counter the recessionary pressures of the coronavirus pandemic. The authors analyse the economic, social and political factors that have shaped the government's fiscal policy response to this economic shock.

Design/methodology/approach

The authors analyse the federal and provincial budget documents for the fiscal year 2020–21 to study the fiscal response of the government. The authors review recent research articles and news pieces to examine the determinants of these budgetary measures.

Findings

The government adopted expansionary fiscal policy measures such as reduced taxation and increased government expenditure to counter the recessionary pressures of the pandemic. These measures, however, were largely constrained by macroeconomic issues of high fiscal debt, slow economic growth and low fiscal space and political influences from the military and religious groups.

Research limitations/implications

The coronavirus pandemic is an ongoing issue which may pose more threats and elicit more policy responses as it evolves. This research may be extended as the pandemic progresses, to include further policy responses.

Originality/value

This research provides insight into the unique problems faced by the Pakistani government during the pandemic, and how it steers the economy despite these limitations.

Citation

Ashfaq, M. and Bashir, M. (2021), "Pakistan: making a “COVID budget” in a struggling economy", Journal of Public Budgeting, Accounting & Financial Management, Vol. 33 No. 1, pp. 69-77. https://doi.org/10.1108/JPBAFM-07-2020-0118