Did Dar deliver?

With Ishaq Dar out of the picture, and with a little more than 200 days left before the current regime ends, the answer to that question is a big ‘NO’, though with some exceptions.

Let us start with the budget deficit. The PML-N said in its manifesto that the budget deficit will be brought down to 4 percent. Until last year, it wasn’t, and by no stretch of imagination does it seem that the fiscal gap would be contained to 4 percent.

The party also said it would increase the tax-to-GDP ratio to 15 percent by 2018. Although tax collections have increased in the just ended quarter, tax-to-GDP cannot be expected to jump leaps and bounds overnight to that target despite the increase in first quarter tax collections. The party also promised to revamp and privatise the state-owned institutions. Aside from a few stock market transactions, the agenda to revamp and privatise remains a damp squib.

Under plans to reduce inflation, the CPI is indeed expected to remain below 6 percent, according to the just released monetary policy statement. Though softer commodity price trend in global market is a key reason behind that, it is equally true that, as per its manifesto, the government has reduced its borrowing from the central bank and instead relied on borrowing from scheduled banks. It has also decreased the tax rates, full points for which. But those brownie points have to be taken away for all the super tax and advance tax regimes.

Also, as the manifesto tracking report published by Prime Institute notes, there has been no development regarding the target to “Tax all income”, whereas 2015 onwards additional duties were imposed along with introduction of new taxes e.g. Capital Gains Tax. Which is why the think tank’s scorecard against PML-N’s tax related manifesto promises shows poor performance? (See table and graph for details)

The party’s third item on economic revival plan promised in the 2013 manifesto said it would take manufacturing growth to 7 or 8 percent. That seems to be on track for now, thanks to lower energy shortage, which was one of the key promises made in 2013. Last year saw LSM grow fastest in at least a decade and 1QFY18 numbers appear promising with 8.4 percent growth so far. Yet investment to GDP ratio, an area that falls under Dar’s domain, was until last year remained low at 15.7 percent and short of miracle it will not meet the promised target of 20 percent by June 2018.

To his credit, however, Dar has delivered – at least partially - on promised reforms in the financial sector and capital markets. For example, the demutualization of bourses, the passing of new companies’ law, and so forth. In addition, the export-import bank (EXIM) bank has also been set up as promised. Dar’s tenure was full of hits and misses. Whether the glass was half full or otherwise, is anyone’s take.