Budget time
The countdown to this budget finds Dar sb busier than usual. Nawaz Sharif’s open heart surgery in London means he must also don the mantle of the prime minister. And, fresh from a successful round-up of the IMF program, he’s ready to deliver another course of his famous Darnomics. He’s already made clear why he’s not much bothered that growth is settling approximately a percentage point lower than forecast. If the IMF is pleased with the final result, why should anyone else worry? In fact, the IMF agreed with downward revisions of all major indicators at every important meeting. For some reason, the Fund has been unusually happy with Pakistan, even though the mark-sheet was anything but unusual.
This year’s theme seems the deficit. Now, it is one thing for the government to take credit for the conducive outside environment – record low oil, for example – long enough for the people to start believing. But it’s quite another for the finance minister himself become a believer. By talking about reining in the deficit to another unbelievable number that will never be achieved the FM is playing out classic Darnomics, once again. But at least there’ll be no Fund next fiscal. So there’ll be no embarrassing revisions at meetings in Dubai.
Yet there’s a political angle to budgeting in campaigning season that neither the minister nor the Fund have talked about much. The ruling party has clearly gone into an early campaign mode. That, as a rule, means added pressure on the deficit. Incumbents, in our neck of the woods at least, always direct taxpayer money to the campaign, and the kitty is always worse off after the vote. That’s not too bad from the IMF’s long term point of view. Whoever is in office the day after will have nowhere else to go but its good offices. So it’s good business all around.