WASHINGTON, Feb 22 (PTI): Pakistan has to do more to ensure that the foundation for strong growth is in place, taxes are collected and are fairly distributed, and those who have more, pay more, IMF Managing Director Kristalina Georgieva has said, as the cash-starved country is engaged in “tough” talks for a bailout with the global lender to tide over the worsening economic crisis.
Pakistan, which is in dire need of funds as it battles a wrenching economic crisis, has received financial assistance from the International Monetary Fund (IMF) in the past and is presently in discussions with the organisation to resume its loan programme.
An agreement on the ninth review of the programme would release over USD 1.1 billion. A resumption of the IMF programme would also unlock other avenues of funding for Pakistan.
Georgieva emphasised that the IMF has made “good progress” in its talks with Pakistan.
“Pakistan has gone through a number of years striving to stabilise the economy and put in place a sound framework for private sector growth. There is still some work the country needs to do to achieve this objective,” Georgieva told PTI in an interview ahead of the G20 Finance Ministers and Central Bank Governors (FMCBG) meeting in Bengaluru this week.
Pakistan, she said, has been severely impacted recently by the floods that put one-third of the country under water. It adds to the difficulties of this South Asian country, she said.
The cataclysmic floods inundated a third of the country, displaced more than 33 million and caused economic damages to the tune of USD 12.5 billion to Pakistan’s already teetering economy. The devastating floods last year killed 1,739 people.
“What we would like very much to support Pakistan in is to make sure that the foundation for strong growth is in place, that taxes are collected, they’re fairly distributed, and that those who have more, pay more, and that the use of public money is well designed, so it targets the most vulnerable people in society,” Georgieva said.
“In other words, subsidies are not made available to those who don’t need them. We know that Pakistan is now seriously engaged in implementing programme objectives,” she said.
“We have had our team come back. Good progress was made. Still some more to be done. And I do hope that we will see Pakistan coming from that very difficult time with a sounder policy framework for the future,” Georgieva said.
Her remarks came days after the two sides concluded the ninth review of the USD 6.5 billion bailout package without a staff-level agreement after 10 days of talks. However, both sides agreed to a set of measures that could still help clinch the deal.
The two sides are now holding talks in virtual settings to finalise a deal to provide the much-needed funds to shore up the foreign exchange.
Pakistan Prime Minister Shehbaz Sharif said earlier this month that the IMF was giving a “tough time” to the government during talks for the restoration of the loan.
“As I speak, the IMF delegation is in Islamabad and they are giving Finance Minister Ishaq Dar and his team a tough time,” Sharif said in Peshawar.
The economic challenge at this point was unimaginable, Sharif said, adding that the IMF conditions that the country has to meet are “beyond imagination”, but it is mandatory to fulfil the demands of the Fund.
Meanwhile, foreign exchange reserves held by the State Bank of Pakistan have fallen to around USD 3 billion, barely enough to cover three weeks of controlled imports.
Earlier, the IMF said in a statement that both sides have agreed to stay engaged and “virtual discussions will continue in the coming days to finalise the implementation details” of the policies, including the tax measures, discussed in Islamabad.
The government is in a race against time to implement the tax measures and reach an agreement with the IMF. The IMF has given a deadline of March 1 to Pakistan for implementing all the measures.