Not quite Darnomics
The reason that the Fund and ADB disagree with the finance ministry’s outlook on the national economy is quite simple. Dar sb seems to have staked his credibility on ‘stabilising’ it, whereas – as the IMF and ADB have noted time and again – holding where we are won’t help things in the medium to long term, and the new challenge is moving towards growth. ADB’s latest analysis must have been sobering, therefore, for the ministry that has been highlighting low inflation and steady currency as if running a marketing campaign.
But there are clearly a number of problems with Darnomics. It’s always good to cut down inflation — though presently CPI seems to have come down more in numbers than reality – but no numbers will help till there is forward movement in the economy. It is for good reasons, after all, that India and China are set to grow at 7.8 and 7.3 percent respectively in the outgoing fiscal, whereas Pakistan is already posturing for another embarrassing downward revision of an already uninspiring GDP target. So while Dar sb never tires of patting himself on the back, perhaps he would address some concerns raised by ADB’s latest report.
When the ministry talks of foreign investment, is it aware that foreign direct investment is mostly stagnant while portfolio investment is picking up? And is that the more ideal mix in a struggling economy with a volatile stock market? Why is large scale manufacturing continuing to disappoint? And what is being done about the subsequent downward pressure on an already miniscule export number? Why has the circular debt once again risen to Rs300 billion, especially after the government mysteriously paid the amount in full when it took office, and made sure there was no audit? How smart was the artificial rupee fix, especially since it has neutralised benefits of duty free European market access? And when, if at all, will Dar sb finally honour the election promise about the tax net? These concerns are in addition to glaring problems like energy and the PSE mammoth annual PSE drain. Since Dar sb is on the road to the next budget, it’s time for him to enlighten people about the more subtle aspects of Darnomics.
