IMF tells Pakistan how to ‘function as a country’

The International Monetary Fund (IMF) has urged Pakistan to take steps to prevent debt restructuring, reported The News International. The country has been reeling from floods that have affected one-third of its population. Kristalina Georgieva, managing director of the IMF, called for two measures: raising tax revenues from those earning good money, both public and private sector, and implementing a fairer distribution of resources by taking subsidies away from those who do not need them.

Last week, the Pakistani government raised petrol prices to Rs272 per litre to appease the IMF, which was delaying the release of a critical loan tranche. The Finance Division said the price increase, which amounted to a rise of Rs22.20 per litre, was due to the devaluation of the rupee against the dollar.

The IMF team recently left Pakistan without reaching a final agreement, despite Finance Minister Ishaq Dar and Prime Minister Shehbaz Sharif agreeing to all preconditions. Saudi Arabia and the United Arab Emirates have also interfered in Pakistan’s economy, calling for structural reforms at a time when the release of the IMF’s tranche has been delayed.

Dawn’s editorial highlighted that although the talks between Pakistan and the IMF showed considerable progress in remedying domestic and external imbalances, gaps still remained. The IMF had asked Pakistan to function as a country and to avoid getting into a dangerous place where it needs debt restructuring. The two measures suggested by Georgieva, namely raising tax revenues and taking subsidies away from those who do not need them, could help the country avoid such a situation.