Dar and IMF
Once again Dr sahib heads off to Dubai for usual business with IMF. However, considering how we are maturing from one tranche to the next, it was inevitable for the contents of the discussion to change somewhat. So, after two good years in office, it is time to move from stabilisation to structural changes mandated by the Fund. The finance minister never tires of boasting economic stability under his watch. He is happy enough with the growth trajectory, slight reduction in the deficit, and especially the low inflation.
And the Fund is pretty happy as well. But this time the talks are expected to be different, and Dar sb might find it a little more difficult than usual to sell his line – inability to meet targets every time. Gone are the days when a successful meeting amounted to getting IMF to agree to revised targets – for one reason or another – and so it was with growth, tax collection and the deficit. But now, since everybody agrees that stability has been achieved, they are more interested in talking about more structural matters like privatisation, taxation, reserves, etc.
That, of course, has never been the finance minister’s strong point. The government’s privatisation drive has rightly come under fire at home. Its efforts at expanding the tax net, after big promises on the campaign trail, have been a singular failure. After recent strikes against the withholding tax especially, the government cuts a sorry figure; not only is it helpless in collecting taxes, it is also not able to employ unorthodox and indirect measures. And it will take some convincing to make the Fund believe that the government will make up for the lost revenue in other ways. Exports are as stagnant as ever; manufacturing even worse. Therefore, unless he’s about to tell the IMF that the government will simply continue borrowing to keep afloat, the next $500 million might not come as easily as the last one.
