4 research outputs found
Macro-economic Policies and Energy Security—Implications for a Chronic Energy Deficit Country
The paper assesses the energy sector’s foreign exchange
requirements for meeting energy consumption and for capital
expenditures, and identifies its implications for the country’s
macroeconomic policy and management. We develop a conceptual model for
projecting the energy sector’s long-term requirements for foreign
exchange. The model indicates that the country’s chronic dependence on
oil imports is likely to expose the economy to high and volatile oil
prices. A fundamental issue for Pakistan is how the energy projects
requiring large inflows of foreign capital and technology will be
financed. The main implication of our analysis is that there will be
continuing pressure on the country’s foreign exchange resources. The
demand for foreign exchange by the year 2024-25 is projected to be US 23- 24 billion. An
implication of the country’s chronic energy deficiency is that the
macroeconomic policies, particularly the foreign exchange rate policy,
need to be redefined to reflect the projected demands on hard currencies
and their expected scarcity value. It is likely that Pakistan will
remain dependent on foreign imports to meet its energy requirements for
a long time and will need to generate commensurate foreign exchange
resources to ensure longterm energy security. JEL classification: E66,
F37, Q43 Keywords: Macroeconomic Policy, Exchange Rate Policy, Energy
Securit