Dar’s gamble

Bleak times are ahead if reliance on informal sectors in budget is dictated by shortsighted political gains

The finance guru is in a fence-mending exercise with the creditors. A day after proposing a budget with a Rs7 trillion deficit, Finance Minister Ishaq Dar told the media that the government is contemplating discussions with lenders and is eager to strike a deal on extending the payment period. However, he confided that no debt-restructuring or write-off is on the agenda, and shrugged off fears of a sovereign default too. How this will be possible is anybody’s guess, and the beleaguered dispensation’s strategy looks like putting the cart before the horse. With a dismal GDP growth of 0.3%, exports choked, remittances dwindling and the rupee in a shambles, what salient features of strength will be put before the donors is hard to guess. There are not any tangibles on this side to make a realistic presentation.

The pledge, likewise, that the country at the brink of bankruptcy will not be seeking restructuring of debts with the Paris Club raises eyebrows. Not many are sure whether the euphoric estimate of generating 3.5% GDP growth will be possible, as Pakistan is scheduled to arrange at least $24 billion over the next fiscal year to avoid an imminent default. Likewise, it is nowhere near an understanding with the IMF to rescue the $6.5 EFF programme, as the June 30 deadline nears. All it needs is a renewed treatise with the Washington-based Fund sending the right signals to other donors that the dilapidated economy is rescuable. This is where the million-dollar riddle comes as to what terms it will sign on the dotted lines after presenting an unattainable budget.

Dar has already gambled by resting his hopes on the informal economic sectors in the budget. Similarly, the hope that regional states will be at the beck and call to funnel money seems unrealistic. Moreover, he has irked the IMF by announcing an amnesty scheme for legalising black money and a 0.6% tax on cash withdrawals, which could lead to hyper-activity out of lawful domains. If political gains are in view through these measures, not much could be said on economic revival.

Published in The Express Tribune, June 11^th, 2023.

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