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

  • Fund managing director Kristalina Georgieva says IMF asking for 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
Published February 20, 2023

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.”

IMF, Pakistan to resume talks on unlocking bailout funds, official says

“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.

IMF stresses on 'timely, decisive' implementation of policies as virtual discussions to continue

“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.


Comments are closed.

Dr. Kay Feb 20, 2023 01:13pm
“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. But their (IMF’s) requirements are quite opposite! If they want to help the poor then why insist on removing subsidies from Electricity and Petrol prices?
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RHood Feb 20, 2023 02:16pm
When you tax already tax paying "rich", wouldn't they find ways to escape paying taxes? How would you estimate or measure or know the "richness" of ill gotten wealth?
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Dr fahad Feb 20, 2023 03:55pm
@Dr. Kay, poor people don't buy petrol and use electricity
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Hilarious Feb 20, 2023 04:03pm
@Dr. Kay, how is the fuel subsidy helping the poor who maybe puts 2 liters of fuel in his tank compared to the guy putting a 100 in his land cruiser? Don’t blame the imf for poor implementation of policies and Mis management, only in Pakistan will you find a country living in handouts, and people criticizing the ones giving the handouts. Criticize the rulers of the nation, or those who are keeping your head above the water.
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Hilarious Feb 20, 2023 04:05pm
@RHood, unfortunately we live in a country where the people are nationalist for sure when it comes to spilling blood, not so much when it actually comes to paying taxes, a weird and grotesque logic.
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Mir Adnan Yakub Feb 20, 2023 05:01pm
M.D must know, that the present govt is corrupt and they will transfer IMF loans into their personal accounts. Hardly invest on poor's development. Loan amounts will go back to U.S bank's. Poor public will pay the repayments with interest. If M.D is worried, than she should check bank balances of our corrupt govt members. Our judiciary, our Generals and top politicians, Let them declare their assets within the country and abroad? They will never disclose at all. IMF loans are only for them. They take and enjoy making IMF team fool.
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Rizwan Feb 20, 2023 05:53pm
Now a days I am taking everything with a heavy pinch of salt.
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Rizwan Feb 20, 2023 05:58pm
Ohh you don't know what the poor of this country can afford.. They'd invite an entire village to their children's wedding ceremonies and spend lavishly in lacs well beyond their means. Wonder where they'd they get that much money if they're poor..
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Az_Iz Feb 20, 2023 06:03pm
The tax to GDP ratio has been too low forever. The exports to GDP ratio is too low. The savings rate compared to other countries at a similar stage of development has also been about 10 percent lower. All this needs improvement. Politicians need to take bold steps and fix these problems. Just borrowing to pay for consumption will create more problems down the road.
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Anony Feb 20, 2023 07:09pm
@Dr fahad , What planet are you on? Just visit Karachi slums and find out! Mostly in North Karachi, Landhi, Korangi and around DHA!
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Balajee Feb 20, 2023 07:17pm
@Dr. Kay, Right on the money! In India, Delhi government offers subsidy to residents for their electricity bills! Residents who use less than 200 units no payment is required! Those who consume up to 400 units get a fifty percent subsidy up to eight hundred rupees! It is a big help for the poor!
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Chandio Feb 20, 2023 07:22pm
@Hilarious, When majority of poor people earning Rs 15-20 can they they afford food, rent, transportation etc..every single rupee counts! Poor people in Urban areas use electricity and petrol....and in rural areas....the Waderaland...its another story...they are struggling to get food for their families! Just visit poor areas around the country and discover the harsh ground realities.
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Chandio Feb 20, 2023 07:27pm
@Hilarious, 2 liters vs 100 liters...a motor cycle vs SUVs...size and source of income has a mega disparity that needs to be addressed.
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KU Feb 20, 2023 08:09pm
We are grateful to Kristalina Georgieva for voicing the concern of the poor and attempting to put some sense into our nonsensical leaders. It is shameful that the decisions which should have been taken by our leaders to save the country and nation are being forced by IMF. Even after all the chaos created by the government, the other pillars of the state are silent bystanders, surely birds of feathers are flocking together.
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Chandio Feb 20, 2023 08:15pm
@KU, Very true!
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Tamizhan Tulukkar Feb 20, 2023 10:15pm
Disagree. The wealthy create jobs, improve Pakistan's image abroad, and nurture capitalism. The wealthy and powerful in Pakistan must be given subsidies so that they can generate employment, and live comfortably as a result of their entrepreneurial skills. They should be allowed to import luxury cars tax free. This will motivate others to become successful capitalists.
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Iqbal Hussain Feb 20, 2023 10:32pm
The people of Pakiatan would further appreciate IMF, if the make it mandatory for government to impose ban on luxlury items and vehicles plus requiring all politicians to disclose their forign held assets.
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Aziz Feb 21, 2023 03:26am
Since 2008 IMF policies viz a viz currency devaluation, hikes in interest and utility rates have lead to massive increase in cost of production hence leading towards de-industrialization! A very alarming situation for the future of the country!
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SHAMIR KHAN Feb 21, 2023 05:51am
Kristalina Georgieva , Thank you very much. You are the real Ambassador of poor people. Love from Pakistan
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Lowell Feb 22, 2023 11:19am
IMF should make recommendations about taxing rich elite especially owners of large chunks of agricultural land!
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Omer Javed Feb 26, 2023 02:05pm
IMF wants breaking of decades' old elite capture, & tax the rich - and therefore more likely over medium term - while it could give appropriate level of SDRs, stop its surcharge policy, & push for debt relief in the short run, to provide ppl a meaningful breathing space from inflation & austerity; which means cutting on development expenditure in economics literature, while belt-tightening, and cutting of wasteful expenditures should be done indeed.
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