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Syed Rizvi's avatar

Brief Solution

1. Fiscal Consolidation:

Reduce unnecessary government spending, enhance tax collection, and restructure existing debt to manage financial obligations more effectively.

2. Pension Reform:

Fund pensions through sustainable contributions, cut future liabilities, and shift to more sustainable pension models.

3. Monetary Policy Independence:

Strengthen the central bank’s autonomy to set interest rates independently, focusing on inflation control and economic stability.

4. Revitalize Financial Sector:

Reduce mandatory government bond holdings by banks to minimize financial repression and encourage private sector lending.

5. Power Sector Reform:

Address inefficiencies, restructure debt, and reduce government guarantees. Publicize power sector agreements with Independent Power Producers (IPPs) to expose and address hidden costs, as IPPs receive payments even without generating power.

6. Build Confidence:

Improve governance, enhance transparency, reduce corruption, and implement broad economic reforms to restore investor confidence and stabilize the economy.

These actions aim to reduce fiscal dominance, improve public accountability, and restore economic control.

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Amir Rehman's avatar

May I request your comments and thoughts on the solutions to cure the extreme case of Fiscal Dominance? Solutions are obvious but please share your thoughts on an action list using priority and stakeholder impact.

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