THE PAKISTAN DEVELOPMENT REVIEW
Fiscal Policies of Pakistan and Kazmi’s Hypothesis
Pakistan has maintained an average GDP growth rate of about 5.5 percent during the period 1981-98. An analysis of the growth experience of Pakistan, however, indicates that some basic macroeconomic imbalances have been built in the economy during this period, which have serious implications for long-term sustainability of the economic growth of the country. The growth performance of Pakistan has synchronised with declining rate of domestic savings, erratic and inconsistent variations in the national savings ratios, low level of domestic investment and excessive dependence on the external resource inflow (current account deficit) to finance the gap between national savings and the level of gross investment. In other words, Saving-Investment and Import-Export Gaps in the economy have widened during this period. These macroeconomic imbalances have been highlighted from time to time in numerous studies such as Burld (1996, 1998); Hasan (1998); Hussain (1999); Kazmi (1991, 1994, 1998); Papanek (1996) and Qureshi (1989).