IMF Chief urges Pakistan to tax the richest, subsidize poor

February 20, 2023 (MLN): The International Monetary Fund (IMF) has urged Pakistan to ensure that high earners pay taxes and only the poor receive subsidies if it wants to function effectively as a country.

The IMF’s managing director, Kristalina Georgieva, made the comments in an interview with German broadcaster Deutsche Welle, stating that those making good money in both the public and private sectors need to contribute to the economy through tax revenues. Georgieva also emphasized the importance of protecting poor people in Pakistan and distributing subsidies fairly.

“My heart goes to the people of Pakistan. They have been devastated by the floods that affected one-third of the population of the country,” she said.

“What we are asking for are steps 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,” she added.

She also added, “I want to stress that we are emphasizing two things. Number one, tax revenues. Those who can, those that are making good money in the public or private sector need to contribute to the economy. Secondly, to have a fairer distribution of the pressures by moving subsidies only towards the people who really need it.”

It should not be that the wealthy benefit from subsidies. It should be the poor who benefit from these subsidies, she clarified.

The IMF’s statement comes after the Fund delegation departed Pakistan without reaching a deal after 10 days of talks.

The country is in a need of funds as the foreign exchange reserves held by the State Bank of Pakistan (SBP) have dropped to around $3 billion.

Thus, Pakistan needs immediate funds from IMF for its survival. It will also unlock other avenues of funding for Pakistan.

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