Why should Pakistan maintain high petrol prices? Atif Mian elaborates.

Dr. Atif Mian, an internationally acclaimed Pakistani American economist, has slammed politicians and journalists who advocate for lower petrol prices in Pakistan, calling them “irresponsible and short-sighted,” and explaining why the rates must remain high.

He stated that Pakistan recently experienced a severe balance of payments crisis, and that the only reason for the exchange rate’s stability is the International Monetary Fund’s (IMF) approval.

“This is hardly the time to abandon caution,” Dr Mian said.

“Pakistan requires a real strategy to get out of its perennial balance-of-payments crisis,” the economist wrote. He went on to say that with oil being so expensive, the country needs to balance its current account.

“As a result, the price of gasoline must remain high in order to bring the current account back into balance — or else the country will be in serious trouble,” he said.

He also stated that gasoline in Pakistan is “currently 20% cheaper than neighbouring India.”

Dr. Mian went on to say that the increase in gasoline prices must be accompanied by a “serious energy transition policy.”

As an example, he stated that the revenue generated by the high gasoline tax can be invested in an energy transition policy that includes public transportation, solar, electrification, and so on.

Dr. Atif Mian frequently advises on structural and economic issues in Pakistan via Twitter.