Finance Ministry take a dig on Atif Mian

May 27, 2023

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“The Ministry of Finance issued a strong response on Saturday to recent statements made by Atif Mian, a prominent Pakistani-American economist, stating that he lacks practical knowledge of economics in action.

These remarks were made in reaction to Atif Mian’s criticism of the government’s economic policies, which he referred to as ‘nonsensical.’ Through a series of tweets on Wednesday, he compared the economic experiences of Ghana and Sri Lanka, ultimately suggesting that Pakistan should take decisive and courageous actions to restructure its economy.

In response, the Ministry of Finance dismissed his statement as an indirect call for default and criticized it as a theoretical perspective that fails to grasp the practicality of economic operations.

The ministry also argued that Atif Mian’s comparison of Ghana and Sri Lanka is flawed, as their economies and populations are significantly smaller in comparison to Pakistan. They highlighted that less than 10% of Pakistan’s debt consists of commercial bonds/sukuks, with the next maturity date set for April 2024. The majority of the debt is owed to multilateral and bilateral creditors who are actively engaged with Pakistan, and none of them have suggested that Pakistan is at risk of default.

The ministry emphasized that Atif Mian neglected to analyze the structural aspects of Pakistan’s debt and disregarded the significant reforms that the country has implemented in the past nine months. These reforms include adjustments to market exchange rates, interest rates, mid-year taxation to improve fiscal position, the imposition of levies on petroleum products, and the non-monetization of the fiscal deficit. Furthermore, these actions were achieved under an unprecedented front-loaded conditionality imposed by the International Monetary Fund (IMF), which was successfully accomplished through determined efforts.

The ministry expressed its disappointment that despite these actions, a staff level agreement (SLA) with the IMF has not been reached, leading to a delay in the release of the 9th review tranche. However, it assured that the country is economically resilient and will continue to thrive. The ministry emphasized that Pakistan has taken decisive and courageous steps towards economic reforms, with a focus on stabilizing the economy and ultimately achieving sustainable growth.

Regarding Atif Mian’s comments on the nominal exchange rate, the ministry deemed them unwarranted. It stated that Pakistan’s real exchange rate is currently estimated to be 15% undervalued, and the nominal rate is influenced by speculation, market manipulation, and political instability. The undervalued exchange rate is seen as a reflection of improving underlying fundamentals in the country.”