Atif Mian, an economist, was refuted by the Finance Ministry on Saturday, saying that he “has no idea” of how “practical economics operates in practice.”
Mian urged Pakistan to take courageous actions, aggressively restructure, and decisive actions in a string of tweets.
In addition, he claimed that Pakistan was adopting “nonsensical policy decisions” when contrasting it with Ghana and Sri Lanka.
The ministry, on the other hand, thinks that the Princeton economist had “suggested” that Pakistan “declares default.”
The ministry in a two-page response said, “This is a misplaced criticism made from a purely theoretical point of view. The gentleman has no idea how 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.”
The reply said that Mian did not care to “analyze” Pakistan’s debt structure, which it claimed consisted of less than 10% commercial bonds and sukuks with the next maturity coming due in April 2024.
The international and bilateral creditors are owed the remaining amount of the debt. According to the ministry, neither of these types of creditors has determined that Pakistan should default.
The ministry further said that the economist “completely ignored the deep-rooted reforms Pakistan has undertaken in the last 9 months”. A fee on petroleum goods, market exchange rates, interest rate modifications, mid-year taxation to enhance the fiscal situation, and non-monetization of fiscal deficit are among the policies mentioned.
The ministry also criticized Mian for comparing the nominal currency rate in an “unwarranted” manner. It also stated that the real exchange rate for Pakistan is currently thought to be 15% undervalued.
The argument further argued that since the government had already obtained a petroleum levy of Rs. 50, it would be “unwise” for it to impose an extra petroleum tax.
The author used this as an illustration of a policy that makes no sense. This is only an inappropriate example, according to the ministry.
