In order to begin the process for the upcoming review of their present programme, the International Monetary Fund (IMF) said on Thursday that it will send a team to Pakistan early in the next month.
Journalists questioned Jihad Azour, the IMF’s director for the Middle East and Central Asia, during a press briefing about whether the organisation would reschedule Pakistan’s debt and offer financial assistance to the nation to help it cope with the effects of this year’s extraordinary floods.
Additionally, they wanted to know if the IMF disagreed with the government’s decision to lower fuel prices and whether Pakistan could now meet the Fund’s requirements.
“The Fund has given Pakistan a lot of support. With Pakistan, we have a programme that has grown in scope and been extended. This is to assist Pakistan in coping with a series of shocks, beginning with the Covid problem where we offered more flexibility, the IMF representative said.
In order to assist Pakistan in coping with recent shocks, such as the rise in food and commodity prices, he stated, “We hastened some of our disbursements.”
After the yearly meetings, “hopefully” we will send a mission to Pakistan to begin the next review process, Mr. Azour stated.
He stated that a World Bank and UNDP team was now evaluating the flood damages, and the IMF was anticipating the report to determine the effects on public finances, the economy, and society.
In light of this evaluation, he stated, “we will update our statistics and (engage) with the authorities to ascertain what their priorities are and how the Fund might assist.
Precautions regarding subsidies
Additionally, Mr. Azour encouraged Pakistan to refrain from providing “untargeted subsidies” to consumers because such interventions have always had the opposite effect.
When asked about giving the people subsidies, he responded, “As in other parts of the world, a subsidy that is targeted to encourage certain things, has demonstrated not to be very beneficial. It has shown to be rather retrograde, in my opinion.
This issue was revisited by the IMF in its regional economic forecast, and according to him, “it suggests that this is not the greatest approach to use the extremely limited budgetary room that exists.”
“As a result, we are urging Pakistan and other nations to stop using an ineffective subsidy that is a waste of resources. And to direct those resources toward helping people in need.
Mr. Azour emphasised that the South and Central Asian region spends 2% of its GDP, and in some cases much more, on social protection.
“It is crucial to use this when difficulties are growing and price increases are hurting,” he said. “Reallocating resources for people who need them the most.”
However, the IMF representative made it clear that this observation was not covered by IMF conditionalities. At a time when inflation is quite high, he explained, “this is part of what’s needed to provide the necessary protection to those who need it.”
Ishaq Dar, the finance minister, also met with David Lipton, the US Secretary of the Treasury’s advisor on international issues, as part of the start of his formal engagements in Washington on Thursday.
Masood Khan, Pakistan’s ambassador, also attended the discussion, which was held at the Pakistani Embassy.
Later, the finance minister also had meetings with Martin Raiser, vice president of the World Bank, and Antoinette Sayeh, deputy managing director of the IMF.
On Wednesday, Mr Dar was intercepted by PTI hecklers when he landed at the Dulles International Airport. A local PML-N leader, Mani Butt, could be seen responding to the hecklers in videos being shared on social media
