Saul Loeb—AFP
The International Monetary Fund (IMF) wants Pakistan to divert resources from rich segments of society to the impoverished and stop providing subsidies to people who don’t need them, according to Managing Director Kristalina Georgieva.
In an interview with German broadcaster Deutsche Welle on the sidelines of the Munich Security Conference, she explained that the steps the global lender was requiring of Pakistan were necessary for it to “be able to function as a country and not to get into a dangerous place where its debts need to be restructured.” Emphasizing that her “heart goes out to the people of Pakistan” who suffered devastating floods last year, she said the IMF’s primary demands were two-fold.
“We are emphasizing two things: one, raising tax revenues, as those who are making good money in public or private sectors need to contribute to the economy. Number two is to have a fairer distribution of precious resources by moving subsidies only towards the people who really need them. It shouldn’t be that the wealthy benefit from subsidies. It should be the poor benefiting from them,” she said, adding that the lender was clear that it wanted the poor people of Pakistan to be protected.
The IMF chief’s statement comes as Pakistan awaits a staff-level agreement with the global lender to revive a stalled bailout that is seen as key to shoring up depleting foreign exchange reserves and stemming currency devaluation, which has pushed weekly inflation beyond 30 percent. Following 10 days of discussions, the matter shifted to virtual talks, with Islamabad undertaking several prior actions, including imposing Rs. 170 billion in additional taxes, hiking up utility prices, and allowing a market-determined exchange rate.