‘Successful completion of discussions’
For almost the entire duration of the Extended Fund Facility, Dar Sahib’s measure of success – in quarterly meetings in Dubai – was getting the Fund to agree to downward revision of almost all important benchmarks; almost every time. The spotlight drew away from the deficit, inflation, reserves, etc, when oil prices plummeted, but that was towards the end of the program. And however much Nawaz Sharif patted Ishaq Dar on the back, the calm of sorts owed to an international Brent collapse, not some novelty in Darnomics, as the finance minister’s understanding of development economics has become popularly known.
Now, after another visit to Dubai, Dar has pushed the fiscal deficit target up three percentage points to 4.1, despite spending a good 10 months of the outgoing fiscal claiming he’d meet the budgeted 3.8. But is this really surprising? And is the finance minister sure the deficit will not slide further into red in the next couple of months? With exports and remittances down, agriculture and manufacturing not growing, the oil window closing and the IMF lubricant no longer on the table, there is only one way the deficit can really go. Add to that fiscal compulsions of an election campaign and the situation becomes far more precarious.
But Dar Sahib will have none of the noise about the numbers that the press is so obsessed with. His reply, full of optimism, is characteristically vague. Firstly, he clarified; the shortfall was because of “pro growth incentives offered to various sectors”. Were these not considered at the time of the last budget? Then he said he’d manage the situation through “improved exports in IT and diversified markets and product lines next year”. Again, little more was quantified. Even if these explanations calmed some nerves in PML-N, they have not done the party’s stock much good in the political market. If the finance minister will not adjust his understanding of the economy, perhaps he can at least set a better standard for ‘successful meetings’.