Implications of Structural Adjustment Programs (SAPs) on the Economy of Pakistan
DOI:
https://doi.org/10.2112/jbe.v14i1.540Keywords:
Structural adjustment program, welfare, inequality, computable general equilibrium, trade liberalization, trade deficit, tariff, income tax, sales tax, expenditure of governmentAbstract
This paper discusses the implication of the Structural Adjustment Programs (SAPs) on the
welfare of the Household and Inequality in Pakistan. To examine the policies below mentioned plans
for the economy of Pakistan, Computable General Equilibrium Model is employed. Fiscal strictness
and trade liberalization policy is selected from the structural adjustment programs to be analysed for
their implication based on CGEM. The analysis considers a combination of these two elements. This
paper aims to analyse the impacts of the removal of tariffs on the country’s trade deficit and its revenue loss. It considers various factors such as the increase in income tax, the reduction in government
spending, and the rise in sales tax. The results revealed that a reduction in the expenditure of government can surpass erstwhile fiscal perspectives regarding the emblems of the welfare of household’s
welfare as well as economy-wide. The results were quite encouraging in terms of avoiding budget
deficits and covering losses resulting from the abolition of tariffs.
