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Saturday, April 13, 2024

IMF urges Pakistan to end subsidies?

According to IMF, a subsidy that is targeted to support certain items has proved not to be very effective, but rather regressive.

The International Monetary Fund (IMF) has urged Pakistan to not give any subsidies as they are counter-productive and a waste of resources.

According to the details, Finance Minister Ishaq Dar is currently in Washington DC, meeting with IMF officials. He met with IMF Deputy Managing Director Ms. Antoinette Sayeh today where IMF assured Pakistan of continued support and has also lauded the policies taken by the country.

However, IMF has warned Pakistan against untargeted subsidies. While talking to journalists, IMF’s Director of the Middle East and Central Asia Department Jihad Azour urged Pakistan that a subsidy that is targeted to support certain items has proved not to be very effective, but rather regressive.

He highlighted that even in its regional economic outlook IMF saw that it is “not the best way to use the very limited fiscal space that exists”.

Read more: IMF Resumes its Extended Fund Facility for Pakistan

“Therefore, we are encouraging Pakistan as well as also other countries to move from an untargeted subsidy that is a waste of resources and to dedicate those resources to those who need it,” he said.

Pertinent to mention that the remarks by the IMF official came after Pakistan slashed the prices of petroleum products on October 1. The newly appointed finance minister Ishaq Dar massively cut the price of petrol by Rs12.63 per liter, giving relief to the inflation-stricken people of the country.

IMF team to visit Pakistan in November

The IMF official also shared the lender’s plans to send a mission in November to Pakistan after the annual meetings as part of preparations for the next review.

“We were saddened by the loss of human as well as also livelihood in Pakistan with the flood and we presented, and we reiterate our condolences for the people of Pakistan. The Fund has been very supportive of Pakistan over the last period. We have a program with Pakistan that has been extended and increased in size.”

However, IMF said it will see how it can help Pakistan in terms of granting relief over repayment after the World Bank and United Nations Development Programme (UNDP) are done evaluating the flood damages faced by the country.

Read more: Floods are seasonal but debts are perennial!