'No subsidies for wealthy': IMF 'very clear', wants Pakistan's poor protected

Kristalina Georgieva, managing director of the International Monetary Fund (IMF), has said that the lender “wants the poor people of Pakistan to be protected” and the government's subsidies should not benefit the wealthy.

The statement comes as Pakistan remains in talks with the IMF for resumption of the stalled Extended Fund Facility (EFF), a bailout programme that has become severely critical in the face of fast-depleting foreign exchange reserves.

Talking to German media outlet DW Asia, the IMF chief said, “My heart goes to the people in Pakistan. They have been devastated by the floods that affected one-third of the population of the country.”

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“What we are asking for is steps that Pakistan needs to take to be able to function as a country and not to get into a dangerous place where its debt needs to be restructured,” said Georgieva.

The IMF chief stressed that the lender was emphasizing two things, “Number one: tax revenues.”

“Those who can, those that are making good money (in the) public sector, private sectors—they need to contribute to the economy.

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“And secondly, to have a fairer distribution of the pressure by moving subsidies only towards the people who really need it. It shouldn't be that the wealthy benefit from subsidies.

“It should be the poor to benefit from them. And there the Fund is very clear. We want the poor people of Pakistan to be protected,” she added.

Last week, talks between the IMF and Pakistan resumed virtually, as the two sides look to reach a deal to unlock funding critical to keep the cash-strapped country afloat.

The two could not reach a deal earlier this month and a visiting IMF delegation departed Islamabad after 10 days of talks but said negotiations would continue. Pakistan is in dire need of funds as it battles a wrenching economic crisis.

Pakistan's foreign exchange reserves held by the central bank have fallen to just $3.19 billion, barely enough to cover three weeks of imports.

A resumption of the IMF programme would also unlock other avenues of funding for Pakistan.

An agreement, if reached, would still need to be cleared by the IMF board.