The IMF Managing Director, Kristalina Georgieva, in her interview to Deutsche Welle Asia had said that “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 rightly said that subsidies assist the richer people. The poor should gain from them. We Pakistanis hold her in the highest regard. We believed she meant what she said and thought IMF would help us in our time of great need.
Since then, Pakistan has been expecting relief efforts and assistance with the hope of a successful outcome instead of procrastination. The outcome is zero because nothing has happened thus far. The 9th review has not even been completed yet.
In her talk, she focused on two aspects: tax revenue and the need for more contributions from the wealthy that are earning well to be taxed heavily. In addition, she rightly said subsidies should be distributed more fairly.
The entire country supports her viewpoint and endorses her opinions. Pakistan nearly completed and fulfilled almost all of the requirements. Unfortunately, despite her concern, Pakistan’s suffering has worsened considerably because there has been no response from the IMF so far.
However, it should be emphasised that the IMF has recently adopted a completely different policy, either as a result of a change in regional strategy or as a result of an obvious shift in geopolitical worldwide balance.
It is necessary to mention this because, despite extremely difficult conditions after the floods, nearly every requirement on the lengthy ‘to do’ list from the IMF has been met by the incumbent government.
The IMF continues to pursue its never-ending wish list and unlike in the past, it is routinely seen engaging in both relevant and irrelevant press discussions. The Ministry of Finance (MoF) was required to reply to the press statements recently made by the IMF resident representative in a similar way through a press release.
In its response, the Ministry of Finance has acknowledged that it has routinely engaged with the IMF and kept them informed about the budget. The MoF claims that the only unresolved matter relates to external financing.
Going through each of the four rebuttals or clarifications, it becomes clear that the Ministry of Finance has answered each of the four points raised by the IMF official in great detail, supporting its arguments with data and logical reasoning.
How can the IMF link the 9th review, which has been pending since October 2022, to the June 2023 budget? It is a valid concern. Surprisingly, they have since then raised a number of further demands.
In order to allow the country’s finances to take a breather and be relieved of the burden of unnecessary financial mess, the IMF should respond in a positive manner and pave the way for assistance by clearing all three outstanding reviews (9th, 10th, & 11th).
Or, if necessary, by giving a waiver due to the damage caused on by the floods, which is a significant contributor to economic hardship.
Asad Rizvi (Karachi)
Copyright Business Recorder, 2023
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