Problems in the economy

And in Darnomics

It’s that time of the year when Dar sb tends to get unusually optimistic about the economy; even by his standards. The fiscal is not far from coming full circle and the usual stocktaking of the last quarter is all but upon him. And even though ADB’s 4.5 percent GDP growth projection ought to bring a smile to any N-leaguer who understands the real economy, the finance minister has still told the 7^th Economic Advisory Committee in no uncertain terms that he’s aiming for full five percent. Of course, that this usual exuberance leaves him a little embarrassed at budget time does not bother him much in the long term.

But this is also the time when all sorts of numbers start pouring into the finance ministry – especially earnings that define the revenue stream and the state of the deficit in cases like ours. And since taxes have simply refused to budge this year as well, the finance ministry was counting on export earnings to tilt the balance somewhat in its favour. But news there, too, is disappointing, especially about the EU’s GSP plus window. Rather than repeat the first year’s 20 percent hike, exports in the Jan-Nov ’15 period registered a 12 percent year-on-year decline, which ought to ring alarm bells.

Of course, Europe’s own problems have contributed. The Union is still witnessing wide contraction and the euro is plummeting. But it’s also true that the government here did practically nothing to build on the first year’s momentum. Producers are still struggling to maintain production, the circular debt is mysteriously rising again, the private sector continues to be crowded out of the money market, and there were zero steps taken towards value addition in the export basket. Even the textile sector, which contributes 75 percent to GSP plus exports, is banging on the doors of the finance ministry with its concerns but nobody has yet answered. It seems while other exporters readjusted seeing our entry into the market, we did nothing and expected the ride to get better on its own. Perhaps it’s best if the finance minister updates his theories as another fiscal approaches.