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Atif Mian, a noted Pakistani-American economist and currently a professor of Economics, Public Policy, and Finance at Princeton University, slammed government policies as the South Asian economy continues to struggle with a growing balance of payment crisis.

In a series of tweets on Wednesday, in which he compared Ghana, Sri Lanka and Pakistan, and what it teaches us about dealing with crises, Atif highlighted issues related to government policies.

The economist, who also serves as the Director of the Julis-Rabinowitz Center for Public Policy and Finance at the Princeton School of Public and International Affairs, said that both Ghana and Sri Lanka defaulted during the last two years, while Pakistan did not.

However, “currency devalued by 1/2 for both Pakistan and Ghana, and 1/3rd for Sri Lanka.”

“So Pakistan currency has devalued significantly more than Sri Lanka’s (SL),” he said.

“More importantly, let’s compare Pakistan’s trajectory with that of SL and Ghana after they default,” said the economists while sharing graphical representations of the currency trajectory of Sri Lanka and Ghana post-default, which showed that the currencies stabilised after entering into restructuring.

“Notice how both Ghana and SL currencies have stabilized post-default as they entered restructuring programs,” said Atif.

On the other hand, the Pakistani rupee has been on a “downward trajectory over the two years, and it continues to go down”.

“There is no end in sight,” said Atif, while sharing graphical representation of the Pakistani rupee trajectory since May 2021.

“What’s the lesson? To thump your chest and say ‘see we have not defaulted’ means nothing if you continue to ignore the underlying crisis,” he said, adding that “the only thing worse than indecisiveness in the face of a crisis is incompetence”.

Despite challenges, Pakistan to avert default: report

Marred by growing political instability, a continuous delay in resumption of the crucial International Monetary Fund (IMF) programme, and dwindling foreign exchange reserves, the Pakistani currency has been at a receiving end for the last two years.

The currency has lost over 40% of its value against the US dollar in the ongoing fiscal year alone. At present, the rupee is being traded at 287.20 in the inter-bank. Meanwhile, in the open-market, the currency is available in the range of 308-310 level.

Meanwhile, Atif, while giving an example of petroleum prices, said “Pakistan is selling petrol at a price that is 20%-25% below the price it is sold in Ghana, Sri Lanka, India, or Bangladesh.”

“At the same time, the government is restricting imports of raw materials needed for production and export. In other words, the government would rather cut the country’s GDP in order to sell cheap petrol!”

“But then lower GDP will make it more difficult to pay off the debt - leading to more devaluation - more misery - and higher petrol prices in terms of purchasing power,” he said.

“This is just one example of the nonsensical policy choices being made,” added the economist.

IMF is baulking probably due to political unrest in Pakistan, says Bloomberg

Atif concluded that in order to address a balance of payment crisis the country needs to “act decisively, restructure aggressively, and take courageous decisions that demonstrate a clear break from the past”.


Comments are closed.

Tulukan Mairandi May 24, 2023 02:05pm
He should be arrested too
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Aatif May 24, 2023 03:07pm
Speak the exact words on Pakistani soil or Kenyan soil.
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Qasim Khwaja May 24, 2023 03:33pm
Remember this is a Pakistan army approved government..
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Abdullah May 24, 2023 03:46pm
Can we have him as our finance minister for the next 10 years irrespective of what party comes in power
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Jani Walker May 24, 2023 03:47pm
Atif concluded that in order to address a balance of payment crisis the country needs to “act decisively, restructure aggressively, and take courageous decisions that demonstrate a clear break from the past”. No chance. The Punjabi elite that has captured the country will not change the status quo. Let the poor become poorer is their mind set.
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Hilarious May 24, 2023 04:19pm
@Tulukan Mairandi, arrest everyone that has anything to say that goes against the magical wonderland wishes of the awam, it is you, the people that are and will keep getting poorer. Living from handout to handout, yet egos so high you feel the world owes you something, when in reality, 75 years and you can’t even come up with a plan for trash collection let alone anything else. Most of the country folk seem mentally ill at this point.
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Nadeem May 24, 2023 05:29pm
Easy said than done
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HashBrown® May 24, 2023 05:39pm
@Hilarious, "arrest everyone that has anything to say that goes against the magical wonderland wishes of the awam, it is you, the people that are and will keep getting poorer." I think he/she was being sarcastic. But I wouldn't at all be surprised now if the ruling coalition responds by attacking Mian personally...and no prizes for guessing what aspect of his background they will highlight.
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KhanRA May 24, 2023 07:20pm
PML is full of anti-Ahmadi extremists (yes, this is 100% fact - hatred of them is at the core of PML). They will never accept ge basic facts presented by him. They will claim IMF is being unfair when the IMF is being logical too. PML only knows how to ruin and how to complain.
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Qasim Mahmood khwaja May 24, 2023 07:37pm
@Abdullah, He was offered during Imran Khans rule, but then was refused because he is Ahmedi. Sad.... We are more than happy then
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Maqbool May 24, 2023 08:04pm
At least he keeps trying to give free advice to his home country, but who’s listening . First PTI didn’t pay attention to him, now PDM isn’t. After all our Leaders know everything about anything . No light at the end of the never ending tunnel , just darkness . Shout, we need elections, but who actually counts the votes .
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Ali May 24, 2023 09:00pm
He is jittery because despite IMF endeavour, Pakistan has still not defaulted.
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Ash Chak May 24, 2023 09:40pm
Why should the elites change? They are far too comfortable in their posh homes and air conditioned cars to bother about the masses. Until the masses don't drag them out in the open streets, ala , Sri Lanka, nothing will change.
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Gp65 May 25, 2023 12:28am
@KhanRA, Did PTI keep him as an economic adviser? No.Hatred for minorities is universal in Pakistan.
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Rebirth May 25, 2023 04:57am
Coming from a country raising interest rates and collapsing their entire financial sector in the process, only to strengthen their currency so that their people would get cheaper petrol. Speaking of restructuring, their economy has already gone bankrupt. They have a 125% Debt-GDP ratio, with the Debt-GDP ratio of T-bills at 100%. What’s his expert opinion on his own nation’s Debt-GDP ratio? For decades, they’ve run $1 trillion-plus deficits. In their budget, $400 billion is devoted to just interest payments and $800 billion for defence, which means they borrow money to pay interest and engage in nonsensical conflicts. Borrowing money just to pay off interest is officially bankruptcy. Wonder if he thinks they should restructure their own debt? Then, they raised interest rates so they’ll pay even more interest on their own debt. Does this expert think that’s a nonsensical decision? When T-Bills are 100% of your GDP, you willingly pay more interest just to give your people cheaper petrol.
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Yusuf May 25, 2023 07:00am
Modi is taking India to new economic heights..and Pakistani compromised generals are destroying country in all domains!
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HashBrown® May 25, 2023 08:45am
@Gp65, "No.Hatred for minorities is universal in Pakistan." And even at our lowest, none of our politicians have the same reputation for genocide that your beloved Modi has (which was one of the factors that won him the popular vote in hindustan, ironically). Maybe focus on that before exporting your own prejudices elsewhere.
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umar May 25, 2023 10:10am
whatever happens only Army will survive
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What is required to strengthen the economy is to create an enabling environment for business.
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Jay May 25, 2023 04:51pm
@umar, How? There is no money to survive!
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Ajamal May 25, 2023 07:04pm
@Abdullah, no, since governments in Pak have totally politicized economy.
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Truthisbitter813 May 26, 2023 09:39am
Mr. Atif Mian fails to account for the fickle, and downright irrationally firebrand political rhetoric that is already tearing the country apart. In this climate, any rational move to correct the economy will be taken as vindication by the PTI hooligans and vandals and its supporters. This is Game Theory now. Not macro-economics. The government is pinning its hopes on the dollars to magically rain down after the budget, but in all honesty, it is trying its best to just limp toward the finish line.
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Snyder May 26, 2023 10:06am
Pakistanis get what they get. The military general during the 2000s far outpaced the bs of democracy before him, but the Pakistanis chose a free judiciary, a clique of dishonorable judges instead. That's wanna bees at their best Income the batboy, honestly, that guy leads Ripagen by light years for his lies, theft and hypocrisy. In addition the incompetent wood happy batboy pulled the rest of it down. Elsewhere he wud have been lynched, ..not in Pakistan though where he is worshipped. Then u got the newest clowns. And now the unfortunate daily governance circus. I say outsource the resource rich Pakistan. U guys r cracking it collectively. It will be pretty useful to the rest of the world.
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Snyder May 26, 2023 10:10am
@Qasim Khwaja, no sir. This is what Pakistanis desired. The incompetent government before this was the group of amateurs whose lead singer had rejected this economist dude for his faith and followed that up with weirdest antics I ever saw in the planet. He is the man you fine men have rallied for. Pakistan has tons of economists strategists in country available right now. But, one entertains them. The worst example was the guy with the bat.
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Tahir Alvi May 26, 2023 10:17am
He is paid economist, people like him when they have no job or work to do, start posting such tweets to show their skills. On the ground other than posting tweets he has no achievements in his life. Showing 2/3 graphs is not a big deal as everyone knows the issue, all Pakistani who face and fight with the current economic situation are real-life heroes and they never give up. The political instability and Indian govt funded/sponsored terrorism in Pakistan are the real issues.
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HashBrown® May 26, 2023 10:43am
@Tahir Alvi, "On the ground other than posting tweets he has no achievements in his life." No external threat can ever be more serious than a threat from within; and you, my friend, with your blind ignorance, represent our greatest threat from within.
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KU May 26, 2023 11:30am
Thank you, readers of BR have been vindicated, we have been pointing out the ''incompetence'' for the last many months.
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Nasir Khilji May 30, 2023 08:01pm
It is easy for an academic to say that in order to address a balance of payment crisis the country needs to “act decisively, restructure aggressively, and take courageous decisions that demonstrate a clear break from the past”. The IMF also says that but a government that lacks credibility and is vulnerable politically this is the death knell. Pakistan for long has needed to act decisively, restructure aggressively, and take courageous decisions but the ruling elite consisting of establishment and military does not allow it. No one answers the 'how' question least of all economists. Pakistan does not need more neoclassical economists but political scientists.
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