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Pakistan's Premier Multilingual News Agency

IMF to Pakistan: Tax the rich, protect the poor

The IMF director acknowledged Pakistan needs to protect its poor in last year’s devastating floods.

Munich, 21 February 2023 (GNP): Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, stated that her heart goes out to the people of Pakistan, but she highlighted the necessity for the Pakistani government to collect higher taxes by eliminating subsidies to the wealthy.

Kristalina Georgieva stated this over the weekend in an interview with German correspondent Deutsche Welle at the Munich Security Conference, “What we are asking for are steps Pakistan needs to take to function as a country and not to get into a dangerous place where its debt needs to be restructured.”

The IMF director acknowledged Pakistan needs to protect its poor in last year’s devastating floods, which flooded more than one-third of the country and resulted in damage estimated to be worth more than $30 billion.

“I want to stress that we are emphasizing two things. Number one, tax revenues. Those who can, those that are making good money, public or private sector, need to contribute to the economy,” she said.

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“Secondly, to have a fairer distribution of the pressures by moving subsidies only towards the people who need it. It shouldn’t be that the wealthy benefit from subsidies. It should be the poor [who] benefit from them. We want the poor people of Pakistan to be protected,” she added.

The IMF MD stated, “we are demanding such measures from Pakistan which were necessary” so that “they can function as a country and not reach such a dangerous stage where they need to restructure.”

Economist Kaiser Bengali, although he agreed with the IMF chief’s comments, told Al Jazeera that higher taxes would harm the economy. “Raising taxes on a sluggish economy will cause it to contract and lead to increased unemployment and poverty. This is basic public finance,” he added.

Key Pakistani officials finalized the ninth review of the $6.5 billion bailout program earlier this month and IMF personnel without a staff-level agreement. All parties concurred on several measures that might yet seal the deal.

Pakistan accepted the Memorandum of Economic and Financial Policy (MEFP), which comprised IMF policy recommendations. Officials expected the staff-level agreement to be reached soon.

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