Monitoring Desk
ISLAMABAD/MUNICH: A top official of the International Monetary Fund (IMF) has asked Pakistan to tax the rich and subsidise the poor.
“My heart goes out to the poor citizens of Pakistan,” IMF Managing Director Kristalina Georgieva told German state broadcaster Deutsche Welle on the fringes of the Munich Security Conference.
She also asked the Pakistani government to collect higher taxes by withdrawing subsidies to the rich.
Georgieva acknowledged that the previous year’s unprecedented floods had ravaged Pakistan.
She said that the IMF had asked Pakistan to take steps to function as a country and not to get into a “dangerous place” where Pakistan’s debt needed to be restructured.
“Those who can, those who are making good money in the private and public sectors, they need to contribute to the economy,” she said, highlighting the two points IMF emphasized during the delegation-level talks with Pakistani officials.
“And secondly, to have the fairer distribution of pressure by moving subsidies only towards the citizen who really need it. It shouldn’t be like the wealthy benefit from subsidies. It should be the poor who benefit from them,” she said
Pakistani officials, IMF staff-level talks concluded
Earlier that month, Pakistani officials and the IMF staff concluded talks for the ninth review of the remaining of 6.5-billion-dollar bailout package without a staff-level agreement. However, both sides agreed to continue with the negotiations to clinch a deal.
The Pakistani authorities hoped that they would convince the IMF to implement the conditions gradually.
Pakistan has agreed to gradually implement the Memorandum of Economic and Financial Policies (MEFP), which contained policy suggestions by the IMF. Officials hoped the staff-level agreement with the IMF would reach soon.
There was a broad consensus regarding leaving the rupee value to be determined by the market forces, lifting the ban on imports, and allowing the imported goods to be cleared.
Emphasizing that Pakistan collects taxes from the rich and benefits the poor, Georgieva highlighted that the country didn’t need debt restructuring. “There is no debt restructuring for Pakistan. Rather, strict measures are needed to run the country.”
“WE are demanding measures from Pakistan which were urgently needed so that they can run as the country and not reach such a dangerous area where they need to rebuild.”
In separate comments, Georgieva said the money collected from the rich in the form of taxes should be spent on those who needed the Pakistani government’s help. She has stressed that it was “a very compassionate and reasonable” request.
She questioned why the rich in Pakistan should benefit from the subsidies and shouldn’t pay taxes in the face of tremendous challenges. She concluded that the IMF was “very clear that it wants the poor people of Pakistan to be protected”.
