Saul Loeb—AFP
The International Monetary Fund (IMF) on Thursday said it will determine the scale of its support to flood-hit Pakistan in accordance with the damage assessment report being compiled by the World Bank and the U.N. Development Program.
“We are waiting for the assessment of the damages that the World Bank and UNDP are conducting to see what are the repercussions on public finance and the impact on the economy and on society,” IMF Middle East and Central Asia Department Director Jihad Azour told journalists during a briefing in Washington. “We were saddened by the loss of human as well as livelihood in Pakistan with the flood and we presented, and we reiterate our condolences for the people of Pakistan. The Fund has been very supportive of Pakistan over the last period. We have a program with Pakistan that has been extended and increased in size,” he said, stressing the global lender has always come to Pakistan’s aid in times of shock, as with the COVID-19 pandemic when it provided the country with additional flexibility.
To a question, Azour said the IMF was not in favor of untargeted subsidies as they often proved counterproductive. “Subsidy that is targeted to support certain items has proved not to be very effective. I would say it has proved to be very regressive,” he said. “In our regional economic outlook, we are again looking at this issue that is showing that this is not the best way to use the very limited fiscal space that exists,” he said, adding this was why the IMF encouraged Pakistan and other countries to discontinue untargeted subsidies that were a waste of resources. He also stressed that the IMF encourages countries to dedicate available resources to those who need them most.
This is especially necessary now, he said, because inflation is peaking globally and limited resources must be reallocated for those who need them most. This, he clarified, was not a condition imposed by the IMF, but rather a necessary protection for vulnerable communities.
To another question, the IMF official said the global lender would sent a mission to Pakistan in November as part of the next review for release of the next tranche of its ongoing bailout.
The press conference took place amidst Finance Minister Ishaq Dar’s official visit to Washington, where he is slated to meet officials of the U.S.; the World Bank; and the IMF. Prior to leaving, Dar said he would seek global support for flood-hit Pakistan, while stressing that the country had no plans to seek debt rescheduling from multilateral donors.