IMF should work with Pakistan to protect the deprived: Human Rights Watch

The International Monetary Fund (IMF) must work with Pakistan’s government to protect the economically deprived, according to Human Rights Watch (HRW), an international non-governmental organization headquartered in the US.

In a statement released on Monday, HRW said Pakistan is facing one of the worst economic crises in its history, jeopardizing millions of people’s rights to health, food, and an adequate standard of living.

“Millions of Pakistanis have been pushed into poverty and denied their fundamental social and economic rights,” said Patricia Gossman, associate Asia director at Human Rights Watch. “The IMF and the Pakistani government have a responsibility to address this crisis in a way that prioritizes and protects low-income people.”

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The statement comes as Pakistan is facing one of the worst economic crises in its history, with its central bank’s foreign exchange reserves decreased to $3 billion, barely enough to cover three weeks of imports, while the country faces its highest inflation levels since 1975.

Meanwhile, the government in its bid to appease the IMF has increased fuel prices and removed a cap on the foreign exchange rate, leading to a drastic depreciation of the Pakistan rupee’s value against the US dollar.

As per reports the IMF has also asked Pakistan to increase its general sales tax rate to a minimum of 18% from 17%.

The country desperately needs the IMF to release an overdue tranche of $1.1 billion, leaving $1.4 billion remaining in a stalled bailout programme set to end in June.

HRW said that the IMF bailout installment would ease the crippling shortage of foreign exchange and unlock access to other funding, including from multilateral and bilateral donors.

‘IMF is giving Pakistan tough time’

However, HRW highlighted that the conditions the IMF places on this loan “could either exacerbate social and economic hardship or provide desperately needed relief to Pakistanis while addressing the crisis’s underlying causes”.

“A depreciating local currency, skyrocketing inflation, and the removal of subsidies for electricity and fuel have already made it harder for many people to meet their basic needs. Increasing value added taxes instead of imposing progressive taxes will hit hardest on the people already most heavily affected,” it noted.

It said the IMF "should use part of the anticipated savings to strengthen social safety nets by including a structural benchmark to significantly broaden coverage and increase social spending."

It also believes the IMF should urge Pakistan’s government to enact policies to increase women’s access to employment by reducing barriers, including by providing state-funded maternity leave and access to affordable menstrual hygiene.

Moreover, it said new tax measures should be progressive in nature and should not exacerbate inequality and increase the cost of living in ways that undermine rights.

“Any cuts in subsidies for electricity, fuel, and natural gas should be preceded by a comprehensive reform plan that ensures everyone is able to access energy supplies essential for basic rights."

It added that the IMF’s recommendations should encourage government spending on social services, such as education, health care, and poverty-reduction programs while shoring up government revenues by improving the tax collection infrastructure and adopting stringent and transparent accountability measures.

“The IMF should use its procedures to make needed funds available as soon as possible, putting into place safeguards to protect people’s economic and social rights,” said HRW.

“The IMF should provide Pakistan the time and flexibility to achieve a sustainable, inclusive, and rights-based recovery,” Gossman concluded.