Fiscal policy is an important component of the economic policy. Economic problems of different countries are different. The economic problems of a developing country are more flaming and sophisticated in nature then developed country. Poverty and unemployment are found in large scales in the developing country. The growth rate is also found in single digit. The growth of economy is a most important aspect for the country. For this reason, a suitable fiscal policy is needed. Fiscal policy tames the inflation and deflation both. The monetary policy’s most important objective ‘growth with stability’ can also be achieved with the help of fiscal policy. Fiscal policy reduces consumption habits among the peoples and increases savings and investments. Thus, Fiscal policy creates capital formation for the development of the country.

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Keywords: Economy Policy,  Developing Country, Poverty, Unemployment, Growth Rate,  Monetary policy, Growth with Stability, Consumptions, Savings, Investments, Capital Formation, Inflation, Deflation.