Pakistan’s poor should benefit from subsidies, not the wealthy: IMF chief

Published February 19, 2023
International Monetary Fund Managing Director Kristalina Georgiev speaks in an interview on Friday. — DW Asia Twitter
International Monetary Fund Managing Director Kristalina Georgiev speaks in an interview on Friday. — DW Asia Twitter

International Monetary Fund (IMF) Managing Director Kristalina Georgieva has stressed that Pakistan needs to protect the poor and tax the wealthy while ensuring that subsidies are targeting those who really need them, it emerged on Sunday.

In an interview on the sidelines of the Munich Security Conference on Friday, the IMF chief said: “My heart goes to the people of Pakistan. They have been devastated by the floods that affected one-third of the population of the country.

“What we are asking for are steps Pakistan needs to take to be able to function as a country and not to get into a dangerous place where its debt needs to be restructured,” she said.

“I want to stress that we are emphasising two things. Number one, tax revenues. Those who can, those that are making good money [in the] public or private sector need to contribute to the economy. Secondly, to have a fairer distribution of the pressures by moving subsidies only towards the people who really need it.

“It shouldn’t be that the wealthy benefit from subsidies. It should be the poor [who] benefit from them,” she said. “And there the Fund is very clear. We want the poor people of Pakistan to be protected.”

Pakistan held 10 days of intensive talks with an IMF delegation in Islamabad — from Jan 31 to Feb 9 — but could not reach a deal.

The IMF, however, said in an earlier statement that both sides have agreed to stay engaged and “virtual discussions will continue in the coming days to finalise the implementation details” of the policies, including the tax measures, discussed in Islamabad.

The government is in a race against time to implement the tax measures and reach an agreement with the IMF as the country’s reserves have depleted to a critically low level of $2.9 billion, which experts believe is enough for only 16 or 17 days of imports.

The agreement with the IMF on the completion of the ninth review of a $7bn loan programme would not only lead to a disbursement of $1.2bn but also unlock inflows from friendly countries.

Finance Minister Ishaq Dar on Wednesday tabled the Finance (Supplementary) Bill, 2023, in both houses of the parliament, outlining tax measures to raise an additional Rs170bn in the next four and half months to meet the last prior actions agreed upon with the IMF.

The IMF has given a deadline of March 1 for the implementation of all these measures. However, the bulk of tax measures worth Rs115bn was already implemented from Feb 14 through statutory regulatory orders.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Kindness needed
Updated 20 Jun, 2024

Kindness needed

This year’s World Refugee Day theme — solidarity with refugees — includes keeping our borders accessible and addressing the hurdles they face.
Fitch’s budget note
20 Jun, 2024

Fitch’s budget note

PAKISTAN’S ongoing economic crisis is multifaceted. At one end, the government must pursue stabilisation policies...
Cruelty to animals
20 Jun, 2024

Cruelty to animals

TWO recent incidents illustrate the immense cruelty many in this country subject voiceless animals to. In the first...
Price bombs
Updated 18 Jun, 2024

Price bombs

It just wants to take the easy route and enjoy the ride for however long it is in power.
Palestine’s plight
Updated 17 Jun, 2024

Palestine’s plight

While the faithful across the world are celebrating with their families, thousands of Palestinian children have either been orphaned, or themselves been killed by the Israeli aggressors.
Profiting off denied visas
Updated 19 Jun, 2024

Profiting off denied visas

The staggering rejection rates underscore systemic biases in the largely non-transparent visa approval process.