Budgetary policy and economic goals?

[sadboy222]

Im struggling to find initives over the past 2 years which have contributed to low inflation and external stability ?

[Nima2703]

I guess the recent budget for +1.5B surplus 2012-13 demotes spending therefore promoting low inflation? maybe infrastructure spending therefore lifting efficiency and productive capacity, and export capacity, therefore our level of aggregate supply is increased, cost inflation is lower due to higher efficiency and therefore international competitiveness is improved thereby increasing exports and discouraging purchases of imports thus decreasing the structural CAD and improving our external stability? i dunno :p

[link125]

In the 2011-2012 budget, the governments commitment to spending $36 billion in investment in roads, rail and ports can be recognised as an initiative that assists in achieving the goals of external stability and low inflation. The government's investment in such infrastructure is likely to have assisted in the alleviation of bottlenecks, allowing firms to more efficiently transport their goods to overseas markets. This is likely to have cut the transport costs of firms, allowing them to be more internationally competitive and overall resulting in an increase of exports. Such an increase in exports is likely to have improved the Balance of Merchandise Trade in the Current Account, assisting in reducing the Current Account Deficit and thus, leading towards the achievement of external stability. The reduced transport costs also assists in containing inflation. Lower transport costs will allow domestic firms to achieve higher profits and as such, may become more inclined to pass on lower prices on their goods, assisting in the achievement in low inflation.