The recent emphasis on reducing fiscal deficit has led to the implementation of necessary prudence measures. As of 2022, the government has taken steps to decrease borrowing and debt. For instance, the fiscal responsibility act has been amended to limit the budget deficit to 3% of the GDP.
This move is expected to have a positive impact on the economy in the long run, with predictions suggesting a 2% decrease in inflation by 2025. However, some critics argue that these measures may have a negative effect on economic growth, citing a potential 1% decrease in GDP growth rate. Despite this, the government remains committed to its fiscal prudence measures, with the finance minister stating that ‘a stable economy is crucial for the country’s development’.
With a focus on reducing debt and borrowing, the government aims to achieve a fiscal deficit of 2.5% by 2027. This goal is ambitious, but necessary, to ensure the country’s economic stability. The implementation of these measures will be closely monitored, with regular assessments to be made by the finance ministry. As the economy continues to evolve, it is essential to strike a balance between fiscal prudence and economic growth.