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Wednesday, April 17, 2024  
08 Shawwal 1445  

Don’t throw caution to the wind, Atif Mian advises journalists, politicians on petrol price

Economics professor says Pakistan needs to bring its current account to balance
Economist Atif Mian during a conversation on how unsustainable household indebtedness lead to global financial crises at the World Economic Forum in 2015. Screengrab via YouTube
Economist Atif Mian during a conversation on how unsustainable household indebtedness lead to global financial crises at the World Economic Forum in 2015. Screengrab via YouTube

Economist Atif Mian has advised Pakistani politicians and journalists to don’t throw caution to the wind while reacting to the latter’s demand for reducing petrol prices.

“This is irresponsible and short-sighted,” he said in a Twitter thread on Friday. “Petrol in Pakistan is currently 20% cheaper than neighbouring India.”

Fuel is being sold at Rs233.91 in Pakistan after an Rs6.72 increase on August 15. However, the federal government reduced high-speed diesel and kerosene rates by slight margins in view of varying oil costs in the international market and exchange rate variation. The petroleum ministry, which works on the Oil and Gas Regulatory Authority summary, had also increased the dealers’ margin (a cost incurred by them after import and transportation of fuel) to Rs7.

Politicians from both sides of the aisle in Parliament and PML-N supremo Nawaz Sharif had objected to such an increase. Finance Minister Miftah Ismail was on the receiving end of a great deal of criticism over it, prompting him to address a special press conference to share the background of the decision.

The finance czar was trying to convince journalists and PML-N leaders on Twitter after the development on August 16. He even described himself “as an easy target”. Not a single tax was imposed on the petrol price, he had clarified at the presser and described it as a “good” decision.

Atif, who is one of the world’s top economists, said that Pakistan just had a very serious balance of payment crisis – it was only due to the International Monetary Fund nod that there was some stability in the exchange rate

Read more: Petroleum levy to increase by Rs50 under IMF conditions

“Pakistan needs a real strategy to get out of perennial bop [balance of payment] trouble, he said.

This is not the first time, Atif had been coming up with suggestions and criticising the government. He suggested five things to the coalition government to steer the country out of the economic crisis earlier in July when the rupee went to a historic low against the dollar in the interbank market.

The economist was all set to join Pakistan’s economic team four years ago. But, the Imran Khan-led government had to cancel his appointment to its Economic Advisory Council, because of his religion.

The Princeton University professor stressed the need for bringing the current account in balance – and oil was the major import. So, he added the petrol price needed to remain high to bring the current account in balance or else the country could be back in “serious trouble”.

“But high petrol price must be accompanied by a serious energy transition policy. Eg use the revenue from higher petrol tax to invest in the energy transition. This includes public transport, solar, electrification etc” he added.

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