The obvious is the hardest thing to discover in Pakistan's economy

The market made the economist, not the degree

The episode opens with Muzamil introducing his guest as the spokesperson for the Ministry of Finance and asking him to walk through his own journey — from an economics degree to the chair he now occupies. Muzzammil Aslam’s answer reframes the question. The degree, he says, was just a degree. “I think I became an economist after getting my degree,” he tells Muzamil. Most of his classmates ended up in marketing, teaching, or anywhere but economics, because Pakistan does not have enough economist-shaped jobs to absorb the people it trains.

What made him an economist was the work that followed. For seventeen or eighteen years, his day has started and ended in front of a screen tracking markets. He classifies himself as a market economist — someone who reads what is actually happening in prices and behaviour, then builds a conclusion — as opposed to the textbook economist who collects data, opens a book, and looks for a theory to lay over it. The market, he says, teaches faster than any classroom.

He is sharp about the typical TV economist. “I have a very huge respect for them because they used to be our teachers as well,” he says. “But they are still in the books. They’re not in real life.” His own working principle is that one size does not fit all. A theory that worked in one country at one moment becomes a benchmark, then a religion, and then the wrong answer for the next decade. A good economist, in his telling, needs memory and history more than they need theory.

His first job was at KASB Securities, a joint venture with Merrill Lynch, where his research was co-branded and circulated worldwide, and where he was sent on road shows to London, New York, and Singapore every few months. That early exposure put him on television and in newspapers from the start. By 2018 he had built a YouTube channel — now dormant because of his current role — explaining the economy directly to ordinary Pakistanis without an anchor cutting him off. The whole craft, he says, has been about translating what he sees in markets into the language of a common person.

The obvious is the hardest thing to discover

When Muzamil asks the big question — what is actually going on in Pakistan’s economy — Muzzammil refuses the framing and offers a deeper one. “It is very difficult to discover the obvious,” he says, quoting a line he picked up somewhere and has built his career around. The obvious is taken for granted. Pakistanis assume the economy is always bad, that the dollar must always go up, and that whoever is not currently speaking must be wrong.

His real claim is that “economy” is the wrong unit of analysis. Every policy has a beneficiary and a loser. If a microphone seller doubles his price, he is a beneficiary and the buyer is a loser. The right question is not whether inflation went up but whether more people gained than lost on net. “If there are more beneficiaries,” Muzzammil tells Muzamil, “then obviously on a net basis your country has gained.”

He then applies the test to COVID. A restaurant owner was crushed. A grocery store owner did well. A pharmacy owner did even better. To talk about “the economy” without specifying which side of the ledger you are on is to talk about nothing. The structural changes this government has made, he argues, shift the ratio — more beneficiaries, fewer losers.

Structural change, defined precisely

Muzamil pushes back. The phrase “structural change” has been worn thin, he says — everyone uses it, no one defines it. Muzzammil takes the bait and defines it in one sentence: a policy whose beneficiaries are many and whose losers are few. Move benefits from a few hands to the masses.

He then names the sectors where masses can actually be employed: agriculture, construction, and IT. Pakistan, he reminds Muzamil, has the fifth- or sixth-largest population in the world and the youngest baby-boomer cohort of any major country. Job creation has to happen where many hands can be put to work, not in capital-intensive plants that employ a few hundred people behind a wall of tax incentives.

He uses the Ehsaas Rashan programme as his worked example — a 120-billion-rupee scheme covering twenty million families with a thousand rupees of monthly food support. The thousand rupees is not handed out as cash. It is routed through any of seven hundred thousand kiryana stores that enroll on the platform with an Android phone and a bank account. The shopkeeper scans the customer’s national ID, an OTP confirms the entitlement, the customer collects the goods, the discount lands instantly, and the shopkeeper’s bank account is credited. “Imagine that seven hundred thousand stores get employment,” he says. The government’s own messaging, he complains, focuses on the twenty million families. It should be telling the world about the business model it has just created underneath.

He uses the same lens to defend the focus on agriculture. Pakistan has gone from being short of sugar last year to a surplus this year. It is exporting wheat and maize. It is no longer short on onions and tomatoes. Productivity in food has to grow faster than the population’s two percent — and for the past decade, he says, it grew at point-six-eight percent under the previous government. “Eventually you will be in deficit, not in surplus.” That is the gap he says the current government has finally started to close.

Thirty years of protecting the wrong people

Muzzammil’s sharpest argument lands on the auto sector. For thirty years, he says, Pakistan has handed auto assemblers duty protection on the grounds that the market is too small for them to be competitive without it. The result is that “220 million people suffer because of this policy. Every person has to buy an expensive car just to make sure they get profits.”

His broader principle is that a country should specialise in what it actually does well. New Zealand does not manufacture cars — it focuses on dairy. Bangladesh has overtaken Pakistan in textiles without an auto-assembly base of its own. Pakistan, by contrast, abandoned the things it used to be good at. He gives the example of Bata shoes from his childhood, where the leather and the sole were both made domestically. Today, almost every component is imported. “If you cannot make a car, then why are you stuck on it?” he asks. Let the country that has invested in R&D sell it to you cheap, and put your own people to work in the sectors where you have a real advantage.

He extends the same logic to comparing the PML-N and PPP records. PML-N’s growth numbers were higher, he concedes. But the People’s Party government created 1.2 million more jobs across its term because its policies were tilted toward the labour-absorbing sectors — agriculture and rural employment — rather than capital-intensive plants. Growth and jobs, he insists, are not the same number.

Why “inflation is coming down” doesn’t mean what you think

Later in the discussion, Muzamil presses on the food-inflation question. Muzzammil starts with last year’s comparison — tomatoes down thirty percent, onions down thirty percent, eggs stable, lentils down — and then stops to explain the most important communication gap in Pakistani economics.

When the government says inflation is coming down, the public hears that a hundred-rupee item will become ninety. What the government actually means is that the item that rose from ninety to a hundred last year will only rise to a hundred and five this year. “The rate of change,” he says — what used to grow at ten percent will now grow at five — is what the official number is tracking. The price still goes up. “This is the communication gap between the government, the common man, and the media.”

He then introduces core inflation — the measure that strips out food and energy because those two categories are volatile. By that measure, he claims, this government’s core inflation is broadly in line with PML-N’s. The headline number people feel is being driven by global commodity prices, not by domestic mismanagement.

His policy recommendation follows from his diagnosis. Capping farmer prices to make food cheap in the short term forces farmers out of business and creates the deficit that produces three-times-higher prices the next year. The right answer is to raise incomes, not to suppress prices. “Increase the income levels. Don’t force someone to sell cheap.” He runs through the urea example — notified at 1,800 rupees a bag while the international price is 10,000 — and shows how an 8,000-rupee arbitrage doesn’t reach the farmer at all. It gets smuggled out. The policy is supposed to help the farmer; it ends up depriving him.

The rupee is a shock absorber

Muzamil shifts to the dollar — the question that fills every WhatsApp group. Muzzammil’s answer is to start with PML-N. Within a month of taking over as finance minister, he reminds Muzamil, Miftah Ismail admitted that the rupee was overvalued and depreciated it. A month later he did it again. When pressed, he said his first assessment had been wrong. The caretaker government that followed took the rupee from 115 to 128. Altogether, a 22-percent devaluation — and even after all of that, Pakistan still had to go to the IMF.

The lesson, Muzzammil says, is that a currency is just a shock absorber. He uses the heartbeat-monitor metaphor he reaches for often: a flat line on the screen means the patient is dead. Movement is the sign of life. When information changes — global commodities, current-account balances, exports — the currency moves to absorb the change. Pinning it artificially is what produced Ishaq Dar’s collapse.

He runs through the numbers. PML-N’s last year produced a $19-billion current-account deficit and $30 billion of total damage between borrowing and reserves depletion. “Just imagine if thirty percent of your economy is hit in one year,” he tells Muzamil — using his own COVID weight loss as an analogy. “I came down from ninety to eighty-two kilos and started to look like a skeleton.” A country cannot absorb that without showing it.

His current call on the rupee is calibrated. “It could go to 150 again, and it could go to 190.” If information moves in Pakistan’s favour — exports up, commodities down — the rupee will appreciate. If not, not. The currency in 2019 was at 165, came down to 155, hit 168 in COVID, came back to 153, and is now in the 170s. The right reference point is not the bottom of the cycle. It is the cycle itself.

The political cost of doing the right thing

By the end of the conversation, Muzzammil is making the most uncomfortable argument of the episode. The current government has, he says, deliberately spent its political capital. It raised fuel prices. It tightened on cars and phones. It pushed import duties up to slow consumption. Within three months, the monthly current-account deficit fell by half a billion dollars. This was a choice — not a constraint.

The alternative was the 2018 playbook. Hold the line through to the next election, let the imbalance compound, and hand the next government a default. “If we had waited like Miftah, just to win the election, the situation would have been completely different.” The current tightening, he insists, is done — but agriculture, IT exports, and conventional exports are being explicitly protected through it. “What we are discouraging? Cars. Expensive phones. The iPhone 13 just came out. If you have a 12, run it for another year.”

The deeper point he makes to Muzamil is that today’s relief is tomorrow’s tax. Subsidies have to be borrowed for. Borrowing has to be repaid. The repayment shows up as either future taxes or future inflation — and inflation, he says, is itself a tax the government quietly collects. “It is better to stay within means today rather than keep passing it on to the next generation.”

He is unsparing about how Pakistani public discourse handles this. Policy disagreement is fine. Character assassination is not. He singles out the treatment of Reza Baqir — a Pakistani national, an HSE medallist, with a senior IMF career — being publicly branded an Indian or an IMF stooge. “We have proper humans in this country,” he tells Muzamil, “but human capital doesn’t stay because of this kind of moral corruption. It is more damaging than normal corruption.” He praises Miftah Ismail in the same breath for never going personal even when their policy disagreements are sharp.

By the end of the conversation, Muzamil and Muzzammil are sitting with the most honest version of the trade. The structural reforms in agriculture, in the rashan platform, in IT, in exports, are starting to land. The job is to hold the line through one more painful stretch. If the government does not derail in the way Shaukat Aziz, the PPP, and PML-N each derailed before their final elections, Pakistan will not need to go to the IMF on day one in 2023 for the first time in twenty years. “I can assure you on this.”

Asked where he sees Pakistan in 2050, Muzzammil’s answer is generational rather than fiscal. Every country that has turned around has done so on the back of a generational handover. Pakistan, he says, is on the cusp of one. The voters who picked a party by ethnicity are aging out. The generation now coming up is connected to global information, less tribal in its politics, and harder to fool. “I’m a very positive person,” he tells Muzamil at the close. “If I’ll be alive by 2050, I am sensing a much better, independent Pakistan.”