Election-economics from here
The IMF seems happy enough with the way the fiscal year is ending. Perhaps it is glad to see theend of the outgoing program; where all targets and indicators of significance were revised downward at every quarterly checkup. Or, perhaps, it knows the old routine. The PML-N goes into election mode till ’18 – expansionary fiscal policy, liberal deficit estimates, even a little more inflation – and the Fund will be back in business no matter which party forms the next government. The economy will no doubt be stretched, the government will have borrowed heavily from the internal market, and another IMF program would be just what the doctor ordered.
Once more, therefore, Dar sb has been able to sell a lackluster fiscal year as a job-well-done. Plus, there’s always the excuse that not many economies – even in the region – have escaped a production and export slowdown in the last quarter. There is, however, a not-so-subtle difference between their economies and ours. Some have, indeed, been unable to keep up value-add production because declining demand in Europe and the US has hurt their exports. We, on the other hand, never modified our production or export basket. Hence our troubles owe not to any headwinds, but our own inability to budge from a failed policy posture.
The coming year will be harder from the economic point of view. Election-economics has its own dynamics. The government will not mind some heat on the numbers next year, especially as some of its big projects begin to mature. That is why getting it right this year was so important. And from PML-N’s point of view, it has done all the right things, and numbers (and the lenders) say so. For the time being that will work. But election day will be a reflection, among other things, of just what impression PML-N’s economic policies made on thepeople. And not many of them read IMF’s annual reports.
