Will Darnomics or Deficit Voodoo-economics work in Pakistan? Ishaq Dar deja vu

Posted on March 16, 2008 by moinansari

Neglected issues for the new Pakistani government. Eliminating food, fuel subsidies, keeping out the IMF, and stopping the US drones, and halting the Afghan mercenaries coming from across the border

Will Darnomics or Deficit Voodoo-economics work in Pakistan?Will Deficit financing based Darnomics also called Supply-Side Voodoo-economics work in Pakistan? or is it a recipe for bankruptcy, disaster and IMF control of Pakistani assets?

The Peoples Party forced the interim government to raise the oil prices, so that the inflation could be blamed on the previous government. The surprise to the consumers is that oil prices will be raised again despite the $300 million Saudi oil “facility”. Mr. Sharif now wants to give a “relief package” to the people which essentially means deficit financing (11 Billion Dollars to date in May) by borrowing money from international doners at exorbitant interest rates. In the short span of a few weeks Mr. Dar has done what he does best–he has borrowed money in short term loans from every possible source. This is a recipe to invite the IMF back into Pakistan with disastrous consequences for the sovereignty of the country. (See “CIA connection….on this site).

The entire nation is held hostage while these unelcted “leaders” play Carmend Sandiego (”international hide and seek”) across world capitals.

Mr. Sharif seems to demonically possessed, totally posessed with only one issue–the issue of his friend Mr. Iftikhar Chaudhry with whom he had planned a judicial coup to impose the “Bangladeshi” solution (where the Supreme Court judge becomes the president) on the Pakistani nation.

Mr. Sharif playing ethnic politics has not fooled the Pakistanis. He will be reduced to the museum of history like Mumtaz Bhutto’s NPP

Will Darnomics or Deficit Voodoo-economics work in Pakistan?The PPPP knows that the worst ministry to have in the new government right now is the Finance ministry. Huge problems face the new government. From the rise in oil prices, to the trade deficit, to decline in Textile export, there are poison pills left for the new government. The new Finance Minister of Pakistan is Mr. Ishaq Dar who was the Finance Minister of Mr. Nawaz Sharif.

Will Darnomics or Deficit Voodoo-economics work in Pakistan?The track record of Mr. Nawaz Sharif’s financial bungling is well known.

1) During the two terms of Ms. Bhutto and Mr. Sharif the debt grew from $12 Billion to $38 Billion without any meaningful display of infrastructure development other than the really expensive $500 million Lahore-Pindi freeway. It should have cost $100 million. The return on investment of spending $500 million on the Pindi-Lahore route is minimal other than providing the Sharifs who were Lahorites easy access to the capital. An investment of $500 million in increasing arable land in Baluchistan would have a better ROI.

2) The other major fiasco of the Dar era was the Yellow Cab scheme which imported $1 Billion of Korean junk that now ply the roads in Kabul and Karachi and everything in between. For $1 Billion Mr. Dar he could have constructed an automobile manufacturing plant providing permanent manufacturing jobs in Pakistan.

3) The third major fiasco of the Dar era is the confiscation of the Dollar Accounts of overseas Pakistanis. To add salt to the wound of small account holders like me, Mr. Sharif and friends transferred their own personal Dollar accounts to safe quarters one day before the seizure of the accounts.

4) The 4th deadly sin of Mr. Dar and company was depleting the Foreign Exchange reserves to the dangerous levels of $200 million. (almost zero). He is doing the same now. From $19 Billion the reserves are down to $12 Billion. As a result the Rupee is at 70 per Dollar, its lowest since independence.

5) Mr. Dar and Mr. Sharif took loans from international institutions at usury rates of 24% and even higher. It goes to the credit of the maligned Mr. Aziz who worked behind the scenes to pull Pakistan back from bankruptcy. He is doing exactly the same now.6) It has been also alleged by aggravated Japanese journalists that on Mr. Dar’s advice, Mr. Sharif cancelled an invitation from the Japanese Emperor (a very rare event) and went off to Korea to purchase Kia cars with a huge kickback.

7) The most dangerous part of the  era was the interference of the IMF in Pakistani politics. Because Pakistan was on the verge of bankruptcy, the IMF and the World Bank were insisting on Pakistani politicians to sign the Nuclear Proliferation Treaty (NPT) and roll back the Pakistan Nuclear Program.  In a month he has borrowed more than $3.5 Billion at high interest rates. The old finance minister used to ask for an FTA and a University when they met foreign leaders. This Foreign Minsiter asks for loans. If this contrinues the IMF will be back dictating poltics to Pakistan. One of their first diktats was to “roll back the nuclear program”.

Mr. Dar asked Saudi Arabia to give Pakistan a $300 million oil “facility” to Pakistan to overcome the high level of oil prices. The sad part of the episode was that the savings were not passed on to the consumer who continued paying the market level prices which the government used the money for deficit financing. This was not part of the budget and was revealed when an audit was conducted by Mr. Aziz. Th