Tag: atif mian

  • Finance Ministry hits out at Atif Mian’s ‘nonsensical’ label for Pakistan’s economic policies

    Finance Ministry hits out at Atif Mian’s ‘nonsensical’ label for Pakistan’s economic policies

    The Ministry of Finance strongly responded on Saturday to recent remarks made by Pakistani-American economist Atif Mian, criticising his lack of practical understanding of economics.

    Mian had labelled the government’s economic policies as ‘nonsensical’ and suggested that Pakistan should take decisive actions to restructure its economy, citing Ghana and Sri Lanka as examples. In response, the Ministry of Finance dismissed Mian’s comments as a veiled suggestion of default and argued that his critique was purely theoretical, lacking practical insight into economics.

    The ministry refuted Mian’s comparison of Ghana and Sri Lanka, pointing out that Pakistan’s economy and population are significantly larger, making the analogy misplaced.

    Regarding Pakistan’s debt structure, the ministry clarified that less than 10 per cent of the debt consists of commercial bonds/sukuks, with the next maturity due in April 2024. The majority of the debt is owed to multilateral and bilateral creditors, who have not indicated any risk of default.

    The ministry expressed disappointment that Mian overlooked the significant reforms undertaken by Pakistan in the past nine months. These reforms included market exchange rate adjustments, interest rate modifications, mid-year taxation to improve the fiscal position, levies on petroleum products, and non-monetisation of the fiscal deficit. These actions were implemented under an unprecedented IMF programme.

    Despite the delay in reaching a staff level agreement with the IMF, the ministry assured that Pakistan’s economy would continue on the path of reform towards stability and sustainable growth.

    The ministry dismissed Mian’s unwarranted comments on nominal exchange rates, stating that Pakistan’s real exchange rate is estimated to be 15 per cent undervalued, reflecting improving fundamentals.

    In terms of petroleum prices, the ministry highlighted that historically, Pakistan has sold petroleum products at significantly lower prices compared to regional countries. Imposing additional taxes on consumers, especially given the recent price hikes and rising inflation, would be unwise.

    The ministry attributed Pakistan’s current economic crisis to international shocks, including the COVID-19 pandemic, the Ukraine war, and devastating floods. It emphasised that the present government has successfully overcome the challenges inherited from an overheated economy and breached IMF conditionality. The current account deficit has been significantly reduced, indicating progress in balancing payments.

    Lastly, the ministry pointed out that Mian failed to consider the unprecedented political challenges faced by Pakistan. It concluded by expressing optimism that with the likelihood of political stability emerging soon, a major economic turnaround is expected.

    Overall, the Ministry of Finance strongly rebutted Mian’s criticism, emphasising the government’s commitment to reforms and the resilience of Pakistan’s economy.

  • IN DATA: ‘Pakistan’s economy has crashed 13 times in 60 years,’ says Economist Atif Mian

    In an article in the New York Times, Economist Atif Mian discusses what has led to the persisting economic crisis, and what can save Pakistan’s economy.

    SWIPE RIGHT: Atif Mian’s key points

    His key points include the facts that Pakistan’s volume of exports has not risen since 2005 and the government is running on borrowed money right now, but people are ready for a change. He states that Pakistan elected Imran Khan because they want a change in their daily life.

    Delving a little deeper into what Mian mentioned and the links that he provided in his article, the following infographics show the state of Pakistan’s economy.

    World Bank rankings on Pakistan ease of doing business.

    Pakistan, since 2005, has remained an increasingly difficult place to invest in. The ranking in 2020 is 108, which means that ease of doing business has gotten better as compared to 2015 — when it stood at 138. The best time to invest in Pakistan was 2005, when the ranking was even better — at 65. The lower the World Bank’s ranking, the easier the time is to invest in Pakistan.

    The level of investment by private and public sectors during the 1980s and up until 2015

    The graphic above shows that the best time for public and private investment in Pakistan in relation to the Gross Domestic Product (GDP) — any country’s total value of goods produced and services. The best time to invest in Pakistan was in the early 1990s and has been declining ever since.

    Foreign Investment in Pakistan, India and Bangladesh during the years

    The chart above shows that Pakistan had the highest amount of foreign investment in 2004, but it has been declining ever since (with a minimal boost in 2008).

    https://public.flourish.studio/visualisation/1079785/
    Pakistan has performed the least compared to other countries in Asia

    As compared to other countries in Asia, Pakistan’s investment status is the lowest, especially in recent times.