Daronomics is a term used in Pakistan to describe a set of

economic policies ''Economic Policy'' is a quarterly peer-reviewed academic journal published by Oxford Academic on behalf of the Centre for Economic Policy Research, the Center for Economic Studies (University of Munich), and the Paris School of Economics. The jo ...

pursued by

Ishaq Dar Muhammad Ishaq Dar (born 13 May 1950) is a Pakistani accountant and politician who currently serves as the 6th deputy prime minister and 38th foreign minister of Pakistan since 2024. A close aide of the Sharif family, Dar is affiliated with ...

, his predecessors, or successors to manage the

economy of Pakistan The economy of Pakistan is categorized as a developing economy. It ranks as the List of countries by GDP (PPP), 26th-largest based on GDP using purchasing power parity (PPP) and the List of countries by GDP (nominal), 44th largest in terms of ...

. These policies include pegging the dollar-rupee parity, even borrowing

foreign currency A currency is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a ''system of money'' in common use within a specific environm ...

loans to maintain the

currency peg A fixed exchange rate, often called a pegged exchange rate, is a type of exchange rate regime in which a currency's value is fixed or pegged by a monetary authority against the value of another currency, a basket of other currencies, or another ...

, managing and keeping the

State Bank of Pakistan The State Bank of Pakistan (SBP) is the central bank of Pakistan. Its Constitution, as originally laid down in the State Bank of Pakistan Order 1948, remained basically unchanged until 1 January 1974, when the bank was nationalised and the scope ...

's policy rate as low as possible, and managing

inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...

in the country through subsidies and cheap imports due to the fixed exchange rate.

History

During his term from 1998 to 1999,

's policies led to economic challenges for Pakistan. 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. As a result, Pakistanis living abroad increasingly used

hundi A hundi or hundee is a financial instrument that was developed in Medieval India for use in trade and credit transactions. Hundis are used as a form of remittance instrument to transfer money from place to place, as a form of credit instrument ...

rather than official channels. Despite sovereign guarantees, the frozen accounts were converted into rupees forcefully at the official conversion rate of Rs 46 to a US dollar. The country was compelled to restructure its debt, effectively resulting in a technical default. From 2013 to 2017, Dar implemented policies aimed at stabilizing the exchange rate by injecting dollars into the market. These measures were criticized for exacerbating Pakistan's

current account deficit In macroeconomics and international finance, a country's current account records the value of exports and imports of both goods and services and international transfers of capital. It is one of the two components of the balance of payments, t ...

which increased from negative $4.4 billion to negative $16 billion, contributing to the country seeking a bailout from the

International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...

(IMF) in 2019.

References

{{reflist Nawaz Sharif administration Economic history of Pakistan