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Atif Mian ‘has no idea how practical economics operates’: Ministry of Finance

  • Economist's statement is a misplaced criticism made from a purely theoretical point of view, says Finance Ministry
Published May 27, 2023

The Ministry of Finance on Saturday strongly hit back against recent comments made by Atif Mian, a noted Pakistani-American economist, saying that he “has no idea how the practical economics operates in practice”.

The remarks come after Atif Mian criticised the government’s economic policies and termed them as ‘nonsensical’.

In a series of tweets on Wednesday, while comparing the experience of Ghana and Sri Lanka, he concluded that Pakistan should “take decisive actions, aggressively restructure and take courageous actions”.

In response, the Ministry of Finance said his statement “is a veiled suggestion to declare default”.

“This is a misplaced criticism made from a purely theoretical point of view. The gentleman has no idea how the practical economics operates in practice.

“His comparison with Ghana and Sri Lanka is also misplaced given the incomparably small size of their economies and populations relative to Pakistan,” said the finance ministry in its rebuttal.

“Fundamentally, he (Atif) didn’t care to analyse the structure of Pakistan’s debt which has less than 10% share in commercial bonds/sukuks, with the next maturity falling due in April 2024.

“The rest of the debt is owed to the multilateral and bilateral creditors. Both these classes of creditors are engaged with Pakistan and none has assessed that Pakistan should default,” assured the Ministry of Finance.

It added that the economist completely “ignored the deep-rooted reforms Pakistan has undertaken in the last nine months”.

“These included market exchange rate, interest rate adjustments, mid-year taxation to improve fiscal position, imposition of levy on petroleum products and non-monetisation of fiscal deficit.

“All these actions were undertaken under an International Monetary Fund (IMF) programme which was unprecedented as never in country’s history such front-loaded conditionality was imposed.

“However, we accomplished it through heroic efforts.”

The ministry said that it is “unfortunate” that despite such actions, the staff level agreement (SLA) with the IMF has still not been reached yet, delaying the release of 9th review tranche.

“The country is surviving economically and would continue to survive. What Pakistan has done is decisive and courageous; we would continue to walk the road to reforms to stabilise our economy and, in course of time, to steer it toward the path of sustainable growth,” it said.

On the comparison of nominal exchange rate, the ministry said that Atif’s comments are also “unwarranted”.

“Pakistan’s real exchange rate is currently estimated to be 15% undervalued. The nominal rate is the result of speculation, market manipulation and general distraught from political instability.

“The undervalued exchange rate is reflective of the fact that underlying fundamentals are improving,” it said.

The Pakistani rupee settled at 285.15 in the inter-bank on Friday. However, in the open market, the US dollar was being traded in the range of 308-311 level against the greenback, as the gap widened due to foreign currency shortage.

Meanwhile, Atif, while giving an example of petroleum prices, in his tweets on Wednesday 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.”

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

To this, the Ministry of Finance responded that Pakistan has historically sold petroleum products at significantly lower prices than regional countries.

“With petroleum levy of Rs50 achieved, this doesn’t involve any subsidy from the government. It would be unwise to levy additional tax on consumers on top of prices that have doubled in less than a year, especially when they are facing rising inflation.

“The author has cited this as an example of nonsensical policies. This is simply a misplaced example,” it said.

The ministry was of the view that Pakistan’s current economic crisis is due to international shocks of COVID, Ukraine war and devastating floods of last summer.

“The challenges that resulted from an overly heated economy, bequeathed to us in April 2022, and the breach of IMF conditionality on the eve of departure of Pakistan Tehreek-e-Insaf (PTI) government, have been overcome by the present government.

“The current account deficit, the primary indicator of balance of payments imbalance has firmly been brought down from a high of $17.5 billion to around $3.2 billion. This achievement is a reflection of bringing the economy to within its latent strengths and not on borrowed resources,” it said.

The ministry said Atif “is also oblivious to unprecedented political challenges faced by the country”.

“The present situation has major repercussions for the economy. With political stability likely to emerge soon, there would be a major economic turnaround,” it concluded.

Comments

Comments are closed.

Notsurprised May 27, 2023 02:09pm
Why does Dar have to keep shooting himself and us in the foot? Shut up and get the job done. THEN gloat or issue rejoinders etc. Dar's biggest supporters in the past have all been let down. He booted out Miftah for no reason other than family politics and came in antagonizing IMF immediately. Listen to Atif Mian, he is a well wisher and much more well regarded than anyone over here. Invite him to assist and guide us.
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KU May 27, 2023 02:15pm
Statement of the century by an accountant! Should preserve it in a museum.
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Jani Walker May 27, 2023 02:20pm
Ha ha ha. Jokers spewing excuses.
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Haroon May 27, 2023 02:22pm
Back in the 60s, it was Harvard-educated economists who were running our country's economy. They only knew the 'theoretical point-of-view' and yet their policies translated into practical and sustained growth. Pakistanis yearn for that era again. Theoretical economics easily translates into practical economics as you can see with US where the Treasury, Economic Advisory and Fed are run by highly-educated economists and not accountants.
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Pakistani May 27, 2023 02:32pm
one is an accountant, another is an economist - simple as that
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Truthisbitter813 May 27, 2023 02:35pm
@Pakistani, Who is Ayesha Ghaus Pasha then?
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Fazeel Siddiqui (Overseas Pakistani) May 27, 2023 03:33pm
I see USD = 500 not far. GoP/SBP has defrauded overseas Pakistanis last 20 years by exchanging remittances at 25-50% lower unfair rate, but this was to end one day. Darknomics fraud policies sinking Pakistan since 1990s, every economist can asses it very well so do IMF. PTI took huge loans to repay large non-productive loans of PPP/PMLN and to run government & self created defense hoax and now comes the CPEC saga. Now PDM/PPP has to take mammoth loans at high interest rates to repay to their own loans take in last decade. This ponzi cycle will go on and one day it will burst to expose fraud elite of Pakistan and only guns will rule. After PTI educated & skilled are not only leaving politics but also the country.
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BK May 27, 2023 03:36pm
@Truthisbitter813, a stooge of Dar
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Fazeel Siddiqui (Overseas Pakistani) May 27, 2023 03:36pm
PDM/PPP + establishment removed PTI for same reasons they're giving for own disastrous failure, worry is there is no way back from further deepen pit.
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Fazeel Siddiqui (Overseas Pakistani) May 27, 2023 04:00pm
Countries are run by reasoning, economy of people or or survival of rulers, check history. We know in Pakistan King Party is Army, if you question them you will be vanished.
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Tulukan Mairandi May 27, 2023 04:03pm
Exactly. He must be arrested
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Naeem May 27, 2023 04:06pm
Dar deserves a Nishan i Hyder for this statement.so the only hurdle is his shahadat.
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Qaisar Saleem May 27, 2023 06:39pm
The picture painted by the FIn.Minister portrays the factual status of Pakistan Economy. One should take into account the mega picture faced by the country and the short term challenges in the back drop.
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ALTAF NOOR ALI May 27, 2023 07:03pm
Its clear that one who is not the Finance Minister would not be knowing much that FM does. I do not think that the comments of the economist were worth a reply from the Ministry. They should have kept quiet and proved him wrong. I am not sure what kind of people we are that we think that Pakistan would default, today or tomorrow. Be patient. You will see Pakistan thrive, that is how I see it.
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HashBrown® May 27, 2023 07:11pm
“However, we accomplished it through heroic efforts.” This kind of language would be laughable even in a comic book for 5-year-olds, and here we see it in an official statement from a government ministry. But these are the times we live in...
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BK May 27, 2023 08:00pm
So, Atif’s comments touched a nerve I guess. Well, actions speak louder than words and Dar, we can all see the disaster your actions are causing. The truth of the matter is that whatever Atif says is way above the understanding of your small mind.
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Pakistan Army strongest May 27, 2023 08:32pm
Atif just like his beliefs is delusional.
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Muhammad Asad May 27, 2023 08:57pm
Yes noone knows better than Ishaq Dar how to ruin oops I mean run economy :)
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Asad Rizvi May 27, 2023 09:51pm
I replied to @AtifRMian's tweet, offered some suggestions, and begged him to provide a well-thought-out plan so that the entire nation could benefit from it. He always responds quickly to any essential questions, but it's been a while since I haven't heard from him. My tweet, in my opinion, is neither pertinent nor up to his standards. https://twitter.com/asadcmka/status/1661201886878351361?s=46&t=8VT-Bx2AZ5owAJpDQnGQ7w
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Joe May 27, 2023 11:18pm
The intellectuals and educated in Pakistan are considered are being treated as "untouchables" by the corrupt paindoo elite!
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Rebirth May 27, 2023 11:53pm
The main flaw in Daronomics was the theory of artificially strengthening the PKR (dinar). He stays away from monetary policies now as all finance ministers should. Although, he does it unwillingly. He expressed his displeasure through passive aggressive comments in his response. The US economist doesn’t understand that the relation between exchange rates and petroleum prices is not the only issue impacting our economy. Being a typical American, he tried to impose his own country’s realities on ours. The aggressive use of monetary policy to bring down petrol prices for “ordinary” Americans is a US problem. As an economist, he’s better served teaching his foreign Indian and Chinese students, that just as finance ministers shouldn’t interfere with monetary policies, economists shouldn’t draft fiscal policies either. But criticizing the printing machines of his thin-skinned masters would anger them.
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HashBrown® May 28, 2023 02:05am
@Pakistan Army strongest, When you insult a person for their religious beliefs, you insult the very foundations of Pakistan. In this case, you're also insulting a man who's better qualified and more respected internationally than everybody in our so-called Finance Ministry put together.
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EQ May 28, 2023 03:35am
Once again Darnomics is at play. The gap between interbank and open market is growing means what happened in January will be repeated where people will stop using official channels.
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Mark May 28, 2023 08:38pm
@Joe, Indeed, paindoos have paindooized Pakistan to save their skins!
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Carl May 29, 2023 06:51pm
@Mark, Like 1971! A very bloody civil unrest awaits due to Paindoo-nomics!
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Ali Ahmed May 31, 2023 10:30am
I believe Ministry of Finance should re consider suggestion cited by well known Economist, Atif Mian. Without any doubt thing is that Pakistan Economy has been catastrophic for the last year. Stability of Pakistan Economy should be the priority.
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Ali Ahmed May 31, 2023 10:30am
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