Daily Times

Daronomics, a unique brand of macroeconomic policies associated widely with finance minister Ishaq Dar is just as quickly losing its oomph as it had made a comeback. The former finance minister flew back to Pakistan last month after a long exile following his disqualification from office five years ago. However, the determination to bring relief to the masses and claims of having what it needed to keep the dollar in check have now been replaced with disheartening realities. No rabbit appears to come out of the hat anytime soon. Claims of pegging the dollar to lower than 200 and unimaginable help from friends ready to burst through the doors might get drowned by the writing on the wall: no one can and will steer Pakistan out of this economic quagmire but Pakistan itself. It goes without saying that times are much different now-oil was uncharacteristically cheap between 2014 and 2017 when Dar was the last finance minister. This combined, with a lower debt burden, meant that he was able to contain inflation in the short term. Sadly, he should have been the first person to read the tea leaves, not the last one to wake up to the new order.

Let us not forget that it was his government that pushed public debt from Rs 14.5 trillion in FY13 to a staggering Rs 21.5 trillion in just four years. The exchange rate also appreciated 26 per cent during this time, and exports lost competitiveness, shrinking from 14.2 to just six per cent. Pakistan had slid into a balance of payments crisis like no other as no attempts were made to address the economy’s structural limitations, which continue to hound us today.

Despite concerns from economists and the IMF, Dar had neglected to introduce long-due tax reforms, instead increasing the general sales tax and relying overwhelmingly on foreign capital inflows. However, he is only one of many leaders who have pursued dysfunctional economic policies over the years, which have pushed the country to the brink of bankruptcy. Even today, the vigour to bring short-term sunshine remains the same. The country’s refusal to deal with its fiscal deficits has brought inflation to a staggering 27 per cent. The IMF, which has bailed us out too many times to count, is hesitant to provide any more funds unless serious reforms are made to the economy-this means raising taxes, and boosting private sector investments to make exports competitive again. To protect itself against volatility in the international market, it is essential that the country commits to long-term reform-without this, we risk losing the support of international financial institutions who are quickly tiring of the country’s never-ending troubles. *