Internationally acclaimed Pakistani-American economist Dr Atif Mian has criticised politicians and journalists arguing in favour of a reduction in petrol prices in Pakistan, saying that such a view is “irresponsible and short-sighted”, and explained the need to keep the rates high.
He said that Pakistan just had a very serious balance of payment crisis, and it is only due to the International Monetary Fund (IMF) nod that there is some stability in the exchange rate.
“This is hardly the time to throw caution to the wind,” Dr Mian said.
“Pakistan needs a real strategy to get out of the perennial balance of payments trouble,” the economist wrote. He elaborated by saying that the country needs to bring its current account in balance with oil being the major import.
“So, petrol price needs to remain high to bring the current account in balance — else country can be back in serious trouble,” he said.
He also pointed out that petrol in Pakistan “is currently 20% cheaper than neighbouring India”.
Dr Mian added that the petrol price must be accompanied by a “serious energy transition policy”.
Giving an example, he said the revenue from the high petrol tax can be invested in an energy transition policy that includes public transport, solar, electrification, etc.
Dr Atif Mian often advises on Pakistan’s structural and economic issues via Twitter.