Enough Darnomics!
Now that Prime Minister Abbasi is clearly cutting Finance Minister Dar to size, perhaps he’ll help influence a deeper change in direction in the finance ministry as well, especially its obsession with remote controlling the state bank and the money market. There’s not much time left in this electoral cycle, but there must be an immediate move away from Dar sb’s trade mark borrowing binge. Also, the stranglehold on the exchange rate must be let go of and the rupee should be allowed a steady devaluation to the benefit of the export sector.
The new PM would have noticed that all the time Dar sb was waxing eloquent about his policies, the trade deficit was continuously widening into deep red, and this July alone it rose approximately 55pc (yoy). Since this persistent trend has put continuous pressure on the current account as well as foreign exchange reserves, there is an urgent need to address revenue shortfall for some sort of face saving at the election. So far, on the earnings front, there’s little or no improvement in real tax collection, trade balance has, at the risk of repetition, deteriorated, and even remittances – for a host of reasons – are in decline.
That makes it very difficult for the country to function, of course. Hence the blind reliance on loans; even to run the government’s day-to-day affairs. There’s not much to be expected of the private sector because the government’s number-one policy – borrowing – is crowding out most of private investment. Having had a good run with poor results, Darnomics, as Ishaq Dar’s understanding of the economy has come to be known, should be locked up and put away forever.
