In this episode, we dive deep into fiscal deficits in Pakistan and how they wreak economic havoc. In addition, we talk about the linkages between the fiscal deficit, higher interest rates, and external sector vulnerabilities.

Dr. Derek H. C. Chen joined the World Bank in 2000 where he has held a number of positions. Currently, he is the Senior Economist for Pakistan, based at the World Bank office in Islamabad. He oversees the macroeconomics and fiscal programs and leads the production of various economic reports at the Islamabad office, including the most recent Pakistan Federal Public Expenditure Review 2023.

You can read the Pakistan Federal Public Expenditure Review (PER) 2023 here - https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099041223153536828#/P17507702d44490bd0bb660b4b60037e930

Chapters:

0:00 Introduction

1:30 Why are deficits so high?

8:50 Impact of these deficits

16:40 Links between economic instability and deficits

22:40 Government spending issues

26:10 Subsidies for the rich

32:20 Recommendations to solve this