The International Monetary Fund (IMF) has given a big statement amid fears of Pakistan's bankruptcy. He said that if Pakistan wanted to function as a country, it would have to ensure that high earners pay taxes and only the poor get subsidies.
The IMF advised that Pakistan, which is facing a financial crisis, will have to take steps to ensure that. On February 17, IMF chief Kristalina Georgieva gave an interview to German state media Deutsche Welle on the sidelines of the Munich Security Conference. During this, he said that Pakistan needed to take tough measures to avoid going into a "dangerous situation" where its debt would need to be restructured.
There is no need to restructure the loan
According to the Dawn newspaper, he said that the IMF was very clear that it wanted to protect the poor people of Pakistan. He said that it should not be the case that the rich get the benefit of the subsidy. The poor should get its benefit.
We are demanding steps to be taken so that Pakistan remains able to function as a country. He should not reach such a dangerous place where his debt needs to be restructured. He said that Pakistan was devastated by the flash floods last year. One-third of its population was affected by this.
IMF wants Pakistan to do these two things
We are emphasizing two things. First, tax revenue. People who can pay taxes, and who are making good money in the public or private sector, need to contribute to the economy. Secondly, the subsidy should be given only to those who need it. It should not happen that the rich continue to benefit from the subsidy.
The IMF chief's statement came days after the ninth review of the $6.5 billion bailout package was completed without a staff-level agreement after 10 days of talks by the two sides. However, the two sides have agreed on a set of measures that could still help in achieving the deal.
Pakistan can import only for 3 weeks
Pakistan is still in dire need of money as it is facing a severe economic crisis. It has received financial assistance from the IMF in the past and is currently in discussions with the organization to restart its loan program. Meanwhile, foreign exchange reserves with the State Bank of Pakistan have dropped to around US$3 billion. This amount is hardly enough for imports for three weeks.
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