MUNICH: Kristalina Georgieva, managing director of the International Monetary Fund (IMF), expressed that her “heart goes out to the people of Pakistan,” but emphasized that the Pakistani government must raise taxes by cutting off subsidies to the wealthy in order to do so.
On the margins of the Munich Security Conference, Georgieva recognized that Pakistan had been devastated by the record floods the previous year when speaking to the German public television, Deutsche Welle.
She informed the broadcaster that Pakistan had been urged by the IMF to take action in order to function as a nation and avoid falling into a “dangerous place” where the nation’s debt would need to be restructured.
“Tax revenues are number one. She emphasized the two themes that the IMF stressed with regard to Pakistan: “Those who can, those who are making excellent money, public sector, private sector, they need to contribute to the economy.”
“And secondly, to distribute the strain more fairly by allocating subsidies solely to those who truly require them. It shouldn’t be the case that only the wealthy receive subsidies. The people in need should gain from them “Added her.
The ninth review of the $6.5 billion bailout programme was completed earlier this month by the pertinent Pakistani officials and IMF employees without a staff-level agreement. Nonetheless, all parties concurred on a number of measures that might yet be used to seal the deal.
The Pakistani government had planned to persuade the IMF to impose the criteria gradually, but its dreams were dashed during the IMF mission’s 10-day visit.
The Memorandum of Economic and Financial Policy (MEFP), which comprised IMF policy recommendations, was accepted by Pakistan. The staff-level agreement was still anticipated to be reached soon, according to officials.
There was broad agreement that the rupee value should be left to market forces, that import restrictions should be lifted, and that imported commodities should be allowed to be cleared.
To facilitate the transaction, new levies and a rise in the power rate were also to be implemented. But, every agreed-upon remedy would be burdensome for the vast majority of Pakistanis due to the severity of the economic crisis.
Georgieva emphasized that Pakistan does not require debt restructuring since it collects taxes from the wealthy and provides assistance to the poor. “Pakistan’s debt is not being restructured. Instead, the country needs to be run with strong regulations.
In order for Pakistan to “run as a country and not reach such a perilous stage where they need to rebuild,” the IMF MD stated that “we are seeking such actions from Pakistan which were urgently needed.”
Georgieva stated in several comments that tax money from the wealthy should go towards those who required the assistance of the state. She emphasized that the request was “extremely sensitive and reasonable.”
In light of the severe hardships, she questioned why Pakistan’s wealthy should receive subsidies while avoiding paying taxes. She continued by stating that the IMF was “quite clear” in its desire to defend Pakistan’s underprivileged citizens.