IMF managing director Kristalina Georgieva has stated that the organization “wants the impoverished people of Pakistan to be safeguarded” and that the wealthy should not gain from government subsidies.
The announcement comes as Pakistan continues to negotiate with the IMF to restart the Extended Fund Facility (EFF), a bailout program that has become urgently necessary due to the country’s rapidly declining foreign exchange reserves.
The IMF director stated, “My heart goes to the people in Pakistan,” in a statement to German media source DW Asia. The floods, which hit one-third of the nation’s population, have decimated them.
What we are requesting, according to Georgieva, are the steps Pakistan needs to do in order to function as a nation and avoid getting into a precarious situation where its debt needs to be restructured.
One of the two things that the lender was emphasizing, according to the IMF chief, was tax collections.
Those who are capable, those who are earning well in the public and commercial sectors — they need to contribute to the economy. “And secondly, to distribute the burden more fairly by allocating subsidies only to those who truly require them. The wealthy shouldn’t receive subsidies, it shouldn’t be that way.
The people who should profit from them are the poor. And the Fund is pretty apparent there. We wish to protect Pakistan’s poor citizens, she continued.
Virtual negotiations between the IMF and Pakistan were resumed last week in an effort to strike an agreement to release funds that are necessary to keep the cash-strapped nation afloat.
The two were unable to come to an agreement earlier this month, and after 10 days of negotiations, an IMF group visited Islamabad with the promise that talks would continue. Pakistan is in dire need of funds as it battles a wrenching economic crisis.
The central bank of Pakistan now only has $3.19 billion in foreign exchange reserves, barely enough to fund three weeks’ worth of imports.
Resuming the IMF program will also open up new finance options for Pakistan. If a deal could be achieved, it would still require approval from the IMF board.
