Atif Mian, a Pakistani-American economist, expressed concern on Wednesday regarding the Pakistani government’s choice to sell petrol at a 20–25% discount compared to nearby nations like Bangladesh, Sri Lanka, and India.
According to Mian, a former member of Pakistan’s Economic Advisory Council (EAC), this action has caused a decline in the nation’s GDP, making it harder for Pakistan to pay back its debts. He emphasized the necessity for authorities to take prompt action, pursue aggressive restructuring, and exercise bravery.
Mian brought up the comparison of debt default rates for Pakistan, Ghana, and Sri Lanka. Pakistan hasn’t officially defaulted in the last two years, but Ghana and Sri Lanka have.
The Sri Lankan Rupee (LKR) depreciated to a lesser extent, while the Ghanaian cedi (GHS) and Pakistani Rupee (PKR) both underwent significant devaluation. Mian noted that after defaulting, Sri Lanka and Ghana’s currencies increased as a result of enrolling in restructuring plans.
He argued that if the underlying crisis is ignored, boasting about not defaulting on debt is meaningless. Mian emphasized that handling a crisis with indecision and incompetence are both problematic.
He referred to Pakistan’s situation, where lower fuel prices were attained by limiting the import of raw materials needed for production and exports. The economic stability of the nation will be affected over the long term by this strategy.
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