Text book Darnomics

All over again

It seems the IMF has begun taking Dar sb’s appraisals of the economy at face value. So the ‘robust economic activity’ has led the Fund to okay the $500m odd tranche of the Extended Fund Facility (EFF). All major targets have been met, as usual, and the finance ministry is set to record 4.5 percent growth, at least, in the outgoing fiscal. The finance minister has even better hopes for the economy, of course. He sees the GDP figure touching five percent before the year is out, along with improvement in taxation, energy, PSEs, structural reforms, and what not.

This was, as the minister said, the first time Pakistan completed 10 quarterly reviews with the IMF. And while it may not matter to him personally that each time the Fund had to be requested to accommodate downward revisions of almost all targets, such things do impact the economy. When you are behind the curve at every stop, there is only so far the economy can grow in real terms. Also, this is not the first time that Dar sb has projected an unlikely growth figure, and it usually takes him precious little time to forget the anomaly, before assuming a similar posture in the new year.

Such shop talk is not new, especially since Dar sb graced the finance ministry one more time. But to project an unrealistic policy posture amounts not only to misrepresenting facts, but also misguiding people. The government is in no position to take any sort of credit for tax reforms, energy reforms, and especially for handling public sector enterprises. It is such tendencies that have led people at large to coin the term Darnomics for the finance minister’s handling of the economy. If anything, the government has been lucky because of an extraordinarily accommodative exogenous environment, especially historically low oil prices. That, and remittances, kept the economy afloat, despite Dar sb’s best efforts, it seems.