Economic Crisis in Pakistan: Take Strong Steps, Tax Rich, Stop Subsidy Leaks: IMF urges cash-starved Pakistan to emerge from crisis
IMF chief Kristalina Georgieva advised Pakistan to take “strong measures” and said Pakistan should take tough measures to avoid getting into a “dangerous place” where its debt would need to be restructured.
She said the IMF was very clear that it wanted the poor people of Pakistan to be protected, the Dawn newspaper reported. “It shouldn’t be the rich who benefit from subsidies, but the poor [who] benefit from it,” she said.
“What we are asking are steps Pakistan needs to take to function as a country and not get into a dangerous place where its debt needs to be restructured,” she said.
Pakistan was devastated by last year’s flash floods, which affected a third of the population, she said.
“I want to emphasize that we emphasize two things. First: tax revenue. Those who can, those who make good money [in the] The public or private sector must contribute to the economy.
“Second, to distribute the pressure more equitably by only giving subsidies to the people who really need them. It shouldn’t be that the rich benefit from subsidies,” she said. The IMF chief’s statement came days after the two sides completed the ninth review of the $6.5 billion bailout without a staff-level agreement after 10 days of talks. However, both sides agreed on a number of measures that could still help finalize the deal.
Pakistan, which desperately needs funds to fight a devastating economic crisis, has received financial assistance from the IMF in the past and is currently in talks with the organization to resume its lending program.
A deal on the ninth review of the program would free up over $1.1 billion. A resumption of the IMF program would also open up other sources of financing for Pakistan.
Meanwhile, foreign exchange reserves held by the State Bank of Pakistan have fallen to around $3 billion, barely enough to cover three weeks of controlled imports.
Earlier, the IMF said in a statement that both sides have agreed to remain engaged and that “virtual talks will continue in the coming days to finalize the details of the implementation” of the measures discussed in Islamabad, including the tax measures.
The government is in a race against time to implement the tax measures and reach an agreement with the IMF. The IMF has set Pakistan a deadline of March 1 for the implementation of all measures.
(Inputs from PTI)
https://economictimes.indiatimes.com/news/international/world-news/take-strong-steps-tax-rich-stop-subsidy-leakage-imf-tells-cash-starved-pakistan-to-overcome-crisis/articleshow/98080978.cms Economic Crisis in Pakistan: Take Strong Steps, Tax Rich, Stop Subsidy Leaks: IMF urges cash-starved Pakistan to emerge from crisis