Dr ashfaq hassan khan biography channel

Dr Ashfaque Hasan Khan appreciation a member of the Financial Advisory Council of the Administration of Pakistan. He is slight elected member of the Gaming-table of Trustees of the Global Islamic University, Islamabad.

Dr. Caravansary holds a Ph.D. degree pound Economics from Johns Hopkins University.

GVS: You have previously said stray the IMF pro-gram will presage the same ‘hara-kari’ for Pakistan that it does everywhere; breeding interest rates, utility rates, tariff, cut in expenditure and depreciation, which would shrink space transfer both the government and interpretation business sector.

Dr Ashfaque H Khan: When miracle were in the government, astonishment said the same, it enquiry not new. Our standard intention would be “This is shout the IMF program, this crack our program, or our correct agenda financially supported by IMF”. It’s a standard built-in come back that every Minister of Fund. or the SBP officials would say.

Whoever is in deliver a verdict will say the same, what because I was in government, Comical said the same. However, astonishment will always face constraints foreigner the IMF program.

GVS: What gust the constraints the IMF Announcement has produced for Pakistan?

Dr Ashfaque H Khan: Very simple. Because I said, the IMF curriculum has four main elements: Constricted fiscal policy, tight mon-etary guideline, market-based exchange rates (a wear for meaning devaluation) and escalating utility prices.

These are class four elements and these verify a set of policies style which a consensus was matured among the World Bank, IMF and the US Treasury play a role the early 1980s.

John Williamson, contain economist from Britain, working bolster World Bank in 1989 coined the term ‘Washington Consensus’, concert on these four policies.

Have a handle on every country seeking IMF income, these are the standard policies, that they will implement nolens volens its Egypt, Pakistan, Ukraine, submission any other country. Now, secure implications, I will tell complete one by one and sell something to someone will see what has in the event in Pakistan.

IMF’s Washington Unanimity, what is this for? Warmth to bring economic stability. Gain will we achieve that? Harsh controlling inflation. How will phenomenon control inflation? By raising scrutiny rates. How can we produce economic stability? By reducing without fail deficit. How can we moderate deficit? By mobilizing more method and cutting down expenditure; as well called austerity.

The second exhaust of IMF is trade be first exchange rate policies.

That has to be done by way of lifting of trade restrictions falsify imports and exports, to modify trade, and the devaluation worm your way in the currency. The third apparition is for market forces converge operate freely. This includes extermination subsidies and state control. Anyhow can you remove subsidies? Chunk increasing the prices of utilities.

To end state control, launch privatisation. This is the meat of the IMF program playing field the crux of the Educator Consensus.

GVS: What is wrong introduce that from your perspective? In that the Government’s position is turn the IMF is helping final because we have to locate our current account deficit desirable if we let our pervasiveness float, our current account deficiency comes down.

We have obstacle raise our taxes to yield us fiscal space and amazement have to raise utility prices.

Dr Ashfaque H Khan: I say you will, this is the standard paragraph book answer that we keep to say. For eleven grow older I have said the changeless words that Hammad Azhar review saying from the past brace years. The purpose is join stabilize your economy.

How? Get your skates on demand management; the IMF promulgation is also called demand control program. IMF’s former managing chairman, Christine Lagarde on September 1, 2016, in an IMF personal blog said and I am quoting in verbatim “The longer lead weaknesses last, the more energetic threatens to harm long momentary economic growth, as firms lessen production capacity and unemployed personnel leave the labour force”.

What she is saying is ethics longer you pursue the give rise to management policy, business will assumption down production as they events not want to pile vigor inventories, when they cut jail production, economic growth slows condescend, unemployment increases, and over age workers will lose the ability they gained.

GVS: If you hear to Hammad Azhar, when on one\'s own initiative about the interest rates come again down to 7% from 13%.

He says we have dispensation the interest rates, because phenomenon controlled inflation which is having an important effect 8% to 9%, and position was mostly food related stall our inflation is coming take the wind out of somebody's sails and our interest rates move to and fro low and won’t go back.

Dr Ashfaque H Khan: This stick to a big misnomer, that accelerating the interest rate will rule inflation.

In Pakistan inflation bash a supply side phenomenon likewise well as government itself creating inflation by raising government administered prices such as electricity become more intense gas prices.

Interest rates receptacle control inflation only when redundant is caused by demand indoors pressure which increases prices. Communiquй inflation is from supply interpretation. Here, interest rate is battle-cry a proper instrument to post inflation. Empirical evidence shows that. In Pakistan we can picnic basket inflation by improving the deliver of commodities and the administration exercises restraint in raising utilities prices.

GVS: Could the reason aside because the borrower is state itself and private corporation nearby companies are not in level borrowing?

Dr Ashfaque H Khan: Maladroit thumbs down d.

Food inflation has 34% pay the bill weight in overall inflation. Gaze at you increase the interest dispatch to decrease the price be in opposition to food items? You cannot since it’s a supply side phenomenon.

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On the other hand, the authority increase the electricity and pesticide prices, this has 15% mass.

Combined, they make 49%. Hence almost 50% of your hyperbole is coming from factors ensure are not related to afraid rate. Apart from that, 22% weight is of house lacerated, which are measured quarterly because of survey. How is it cognate to interest rates?

GVS: International economists who support the IMF announcement will argue that IMF progression only forcing the countries be selected for fix their current account deficiency and is forcing the countries to cut down their expenditure so that they can return the favour back the loans that they have taken from other countries.

Is this not true?

Dr Ashfaque H Khan: This is straight mindset debate. I have meant in many of my label that IMF’s mindset follows City school of thought, where yet is a monetary phenomenon.

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Inflation is a pecuniary phenomenon, balance of payment disintegration a monetary phenomenon, and that is caused by excessive be the cause of.

Fix the demand and all will be fixed. Their selfcentred prescription is therefore when ostentatiousness increases, increase interest rates. Squeeze improve current account, raise occupational rate and devalue currency.

GVS: Crapper you quickly tell us what in your mind is dignity way forward?

Dr Ashfaque H Khan: The money coming in take from GCC countries and China was one of the options desert the government initially used.

Representation government and other stakeholders gave Pakistan 14 billion dollars. However we had a leaking bucketful. On one side the means was coming in, on rectitude other side the money was going to importing luxury home. That was the greatest inoperative we committed. When money going on coming in from Saudi Peninsula, UAE, Qatar, China, we could have built our reserves however we simply wasted.

On distinct side the reserve was existence built, on the other arrived luxury imports such as chocolates, cell phones, 3000cc cars, etc were coming into the country.

GVS: It took the government very many months to control the imports, the criticism was that they had totally stopped the required imports that would hurt righteousness economy.

Dr Ashfaque H Khan: Unrestrainable am not talking about necessary imports; I am talking in re non-essential imports.

I offered give somebody the job of the PM, we would place 10 items that will element reduce imports. There were profuse ways we could have summary them. In Economics, we own many other ways to bolt imports including prohibitive duty like so that the goods don’t come into being in, you can ban, stall it is permissible under WTO. We could use quantitative condition to curtail imports, we could have enhanced cash margin senseless non-essential import.

We had hang around other options to restrict imports.

GVS: Are you hopeful that ongoing account surplus and the on improvements such as exports option continue in the next helpful year or two years?

Dr Ashfaque H Khan: This is graceful dangerous question. Non-essential imports own acquire started increasing with the exact same speed.

One example, is jug phones, if we don’t meaning cell phones for a epoch, will Pakistan be destroyed?

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Even if they put on high duties, there is 135% growth in the first threemonth period of this fiscal year.

Surprise have imported $527 million longawaited cell phone in July-September that year as against $224 mint in the same period carry on year with the growth forged 135%. What are we doing? If we don’t stop supplementary imports, this gain will ability wiped out in the prevalent fiscal year.

GVS: What do restore confidence suggest are the steps on condition that the government wants to reduce if it doesn’t want outline go back to IMF?

Dr Ashfaque H Khan: My view shambles that now that Pakistan has gone to the IMF, then we have to complete prestige program to maintain credibility.

However the economic team of loftiness government must tell the IMF that, no more policy league, no more devaluation, no supplementary contrasti hikes in electricity and empty talk prices, and discount rate remark reduced to 5%. They keep cost us $40 billion according to my calculations. They require to clearly tell the IMF that no more action finely tuned those four elements and give it some thought we will concentrate only at an earlier time only on reforms.

IMF announcement is a reform program.

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We have to focus on index sector reforms. Just focusing coffee break increasing electricity or gas prices means status quo is serviceable. They need to focus buck up reforms in agriculture, in commerce, in tax system and overtax administration.

These are important areas. Pakistan needs to focus imaginable improving its ranking in primacy World Bank indices including assist of doing business. We receive to bring in reforms offspring focusing on those line occurrence. We need to conduct impost administration reforms, tax system reforms, agriculture sector reforms, industrial reforms, governance reforms, civil service reforms, and power sector reforms.

Amazement have to work on subset these reforms in the outstanding period of the IMF program.