IMF Suggests Subsidies and Taxation to Bridge Economic Inequality Gap

The IMF managing director says Pakistan must ensure its high earners pay taxes and only the poor get the subsidies to function. The floods in Pakistan have affected one-third of the country’s population.

Kristalina Georgieva told German broadcaster Deutsche Welle on Friday on the sidelines of the Munich security conference. She said “Pakistan should step into a functional country and not get into a place where debt needs to be restructured”.

The delegates want to emphasize two things number one is tax revenue and those who can make good money in public or private need to contribute to the economy, second is to have a fairer distribution of the pressures by moving subsidies only toward the people who need them. Wealthy should not benefit from subsidies. It should be the deprived who get benefit from subsidies. Deprived people should be protected from subsidies.

The chief of IMF stated that after the two sides could not deal earlier this month and visiting fund delegates depart Islamabad after 10 days of talk but said negotiations would continue. Pakistan is in dire need of funds as it battles a wrenching economic crisis. Talks center around reaching an agreement on a reform agenda under the country’s $6.5 billion bailout program, which it entered in 2019. An agreement on the ninth review of the program would release over $1.1bn.

Meanwhile, foreign exchange reserves held by the state bank of Pakistan have fallen to $3bn. It makes it very difficult to control the imports for three weeks. A resumption Of the IMF program would also unlock avenues of funding for Pakistan. IMF and the Pakistan government have agreed to stay in touch with each other through virtual discussion. They will continue in the coming days to finalize the implementation details of the policies.

The government is in a race against time to implement the tax measures and reach an agreement with the IMF. Finance Minister Ishaq Dar tabled the finance bill 2023 on Wednesday in both houses of the parliament. The bill outline tax measures to raise an additional RS 170bn in four and a half months to IMF agreement. The IMF issues a deadline to 1st March for Pakistan to implement all these measures.

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Rida Shahid
Rida Shahidhttps://hamariweb.com/
Rida Shahid is a content writer with expertise in publishing news articles with strong academic background in Political Science. She is imaginative, diligent, and well-versed in research techniques. Her essay displays her analytical style quite well. She is currently employed as English content writer at hamariweb.com.

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