Dar and the deficit


Will he learn his lesson?

Finally it strikes the government that the deficit target might be difficult – more like impossible – to meet. But whether or not it’s just the national action plan that is, like the finance minister says, to blame remains open to question. Granted, the war against terrorism will not be light on resources. Yet the war, and contingencies, must have been settled well before the start of the fiscal year, so why the sudden surprise at the drain? Or was the pre-Peshawar action plan that much more limited that alteration will now affect the fiscal deficit? And how good does a finance minister look when he boasts curtailing the half-year deficit mainly because of “non-tax revenue collection” and “freeze on development spending”?

Surely Dar sb – no stranger to the finance ministry – understands well that such measures are purely fire-fighting tactics, and cannot be expected to hold the deficit in the medium to long term. His other claim, that all other major indicators appeared positive in the Jul-Dec period, too, needs to be taken with a grain of salt. Engulfed in power, gas and fuel crises, production is low, which is constraining employment, spending, saving and investment. And, as the finance minister said, development expenditure has been cut down. Even the external price effect – triggered by cheap oil – did not translate into price decrease other than at pumps, not even in public transport.

That, of course, means that the transmission mechanism, which would distribute price reduction across the board, is broken down. But more worryingly, it seems the finance minister’s feedback loop is also compromised. He seemed to understand common problems far better during the campaign, when PML-N leaders promised getting a handle on some of the problem he claimed were the making of the previous government. But seeing his responses and his preparedness, one wonders if he is just following the suit of his predecessor or trying to create some new form of numbers jugglery. Whatever it is, it won’t last long and he, along with his government will have to pay the price, for which, one wonders, if they are willing since it is about the last ministry they have any control over. Buckle up, Dar sb.