Daronomics is a term used in Pakistan to describe a set of flawed economic policies pursued by Ishaq Dar, his predecessors, or successors to manage the economy of Pakistan.[1][2][3]
These policies include pegging the dollar-rupee parity, even borrowing foreign currency loans to maintain the currency peg, managing and keeping the State Bank of Pakistan's policy rate as low as possible, and managing inflation in the country through subsidies and cheap imports due to the fixed exchange rate.[4][5][6]
History
editDuring his term from 1998 to 1999, Ishaq Dar's policies led to economic challenges for Pakistan.[7] Following nuclear tests, the government seized $11 billion from local dollar accounts of Pakistani citizens, after the currency was devalued by 25 percent in the open market compared to the official exchange rate.[8] As a result, Pakistanis living abroad increasingly used hundi rather than official channels.[8] Despite sovereign guarantees, the frozen accounts were converted into rupees forcefully at the official conversion rate of Rs 46 to a US dollar.[8][9] The country was compelled to restructure its debt, effectively resulting in a technical default.[7]
From 2013 to 2017, Dar implemented policies aimed at stabilizing the exchange rate by injecting dollars into the market.[10] These measures were criticized for exacerbating Pakistan's current account deficit which increased from negative $4.4 billion to negative $16 billion, contributing to the country seeking a bailout from the International Monetary Fund (IMF) in 2019.[10][11]
References
edit- ^ "Pakistan must learn to live without 'Daronomics'". October 3, 2022.
- ^ "اسحاق ڈار کی معاشی پالیسیوں سے پاکستان کا کتنا نقصان ہوا؟". Independent Urdu. February 4, 2023.
- ^ Younus, Uzair M. (December 20, 2022). "The fault in our Dar(s)". DAWN.COM.
- ^ Khan, Ammar H. (September 28, 2022). "Daronomics: The fallacy of fixing currency price". DAWN.COM.
- ^ "Investors pin hopes on 'Daronomics' as Ishaq Dar returns to Pakistan as new finance minister". Arab News.
- ^ AHMAD, DR MANZOOR (October 31, 2022). "Daronomics: good or bad?". The Express Tribune.
- ^ a b Ali, Sayem Z. (November 19, 2018). "Daronomics and its aftershocks". Profit by Pakistan Today.
- ^ a b c "Pakistan takes a beating". The Economist. August 20, 1998.
- ^ Aazim, Mohiuddin (July 2, 1998). "Withdrawal from fresh deposits allowed". DAWN.
- ^ a b Hussain, Zahid (September 28, 2022). "Return of the 'Dar' Ages". DAWN.COM.
- ^ "How did Ishaq Dar perform in his previous term as finance minister?". The News International.