Pakistan in Race Against Time to Reach IMF Agreement and Unlock $1.1bn Tranche
By Pakistan is in a race against time to reach an agreement with the International Monetary Fund (IMF) and implement the tax measures outlined in the Memorandum of Economic and Financial Policies (MEFP). The IMF has given Pakistan a deadline of March 1 to implement all the measures in order to unlock the $1.1bn tranche that Pakistan immediately needs.[0]
At the Munich Security Conference, Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), expressed to German broadcaster Deutsche Welle her sympathies for the people of Pakistan, who have been severely impacted by the floods that have impacted nearly a third of the population.[1]
The IMF has urged Pakistan to end subsidies for the upper class and increase tax collection from high earners.[2] Georgieva said that it shouldn’t be the wealthy benefiting from subsidies; it should be the poor who benefit from them.[3]
In 2019, Pakistan began a $6 billion IMF program, which was extended to $6.5 billion in 2020.[4] In August of 2019, a portion of $1.17 billion was received as part of a joint seventh and eighth review.[5] The ninth review has been postponed, which has put 220 million individuals in a precarious position.[5] The central bank's recent data show that Pakistan's foreign reserves are just over $3 billion, which is only enough to cover less than three weeks of imports.[6]
The International Monetary Fund has called for an increase in Pakistan's minimal tax base, the removal of tax exemptions for the export industry, and an increase in energy prices which were previously kept low in an effort to assist the poorer households.[0]
The government is in a race against time to reach an agreement with the IMF.[6] Discussions between IMF and Pakistan revolve around arriving at a consensus on a reform plan under the nation's $6.5 billion rescue package, which was initiated in 2019.[7] Reaching an accord on the ninth assessment of the program would allow for the release of more than $1.1 billion.[8]
Georgieva stated that Pakistan was severely damaged in the previous year due to flash floods, which had an impact on a staggering one-third of its population.[8] The head of the International Monetary Fund (IMF) has firmly stated that they want to ensure that the impoverished population of Pakistan is safeguarded.[1]
The price of petrol has gone up to Rs 272 per litre following a rise of Rs 22.[9]
0. “Pakistan National Assembly passes bill to meet IMF demands for $1.1 loan facility” Moneycontrol, 21 Feb. 2023, https://www.moneycontrol.com/news/world/pakistan-national-assembly-passes-bill-to-meet-imf-demands-for-1-1-loan-facility-10135261.html
1. “IMF chief’s advice for Pakistan: The poor, not wealthy, should benefit from subsidies” The News International, 20 Feb. 2023, https://www.thenews.com.pk/print/1042275-imf-s-advice-to-pakistan-tax-the-rich-protect-the-poor
2. “IMF demands Pakistan to end subsidies for upper class, increase more taxes” SAMAA English, 20 Feb. 2023, https://www.samaaenglish.tv/news/40027901
3. “Pakistan’s elite in trouble amid bankruptcy as IMF tells Shehbaz Sharif govt to tax only the rich” Firstpost, 20 Feb. 2023, https://www.firstpost.com/world/pakistans-elite-in-trouble-amid-bankruptcy-as-imf-tells-shehbaz-sharif-govt-to-tax-only-the-rich-12182782.html
4. “Tax the rich, support the poor, IMF chief asks Pakistan” Global Village space, 20 Feb. 2023, https://www.globalvillagespace.com/tax-the-rich-support-the-poor-imf-chief-asks-pakistan/
5. “IMF to crisis-hit Pakistan: Tax the rich, protect the poor” Al Jazeera English, 20 Feb. 2023, https://www.aljazeera.com/news/2023/2/20/imf-to-crisis-hit-pakistan-tax-the-rich-protect-the-poor
6. “Pakistan must ensure high earners pay taxes-only poor get subsidies: IMF MD” PakTribune.com, 20 Feb. 2023, https://www.paktribune.com/news-details/pakistan-must-ensure-high-earners-pay-taxes-only-poor-get-subsidies-imf-md
7. “IMF chief asks Pakistan to tax the rich, subsidise the poor” Dunya News, 17 Feb. 2023, https://dunyanews.tv/en/Business/700733-IMF-chief-asks-Pakistan-to-tax-the-rich,-subsidise-the-poor
8. “Pakistan needs to take steps to avoid an economic crash: IMF” The Federal, 20 Feb. 2023, https://thefederal.com/international/pakistan-needs-to-take-steps-to-avoid-an-economic-crash-imf
9. “Raise revenue, give subsidies only to needy: IMF to Pakistan” The Tribune India, 21 Feb. 2023, https://www.tribuneindia.com/news/world/raise-revenue-give-subsidies-only-to-needy-imf-to-pakistan-481777
