MM News

WASHINGTON: The International Monetary Fund (IMF) mission will visit Pakistan in November for the preparation of next program review.

The development was announced by IMF’s Director of the Middle East and Central Asia Jihad Azour during a media briefing on Thursday.

“We now have a larger and more extensive program with Pakistan. We had recently completed a review that provided Pakistan with $1.2 billion and hopefully we will be fielding a mission in November after the annual meetings to Pakistan in order to start with the authorities preparing for the next review,” the IMF official said.

“This is to help Pakistan deal with the confluence of shocks starting with the Covid crisis where we provided additional flexibility.”

In order to determine the effects on public finances, the economy, and society, Azour stated that the Fund is awaiting the results of the damage assessment that the World Bank and UNDP are conducting.

In response to a query, Azour encouraged Pakistan to avoid providing “untargeted subsidies” to customers because doing so would be a “waste of resources.”

“On the subject of subsidies, as in other parts of the world, targeted subsidies that support certain commodities have not shown to be very beneficial. It has shown to be extremely regressive, I believe,” he observed.

“And in our regional economic outlook we are once more looking at this issue that is suggesting that this is not the best way to utilize the very limited budgetary space that exists.

In order to avoid wasting resources on untargeted subsidies and to allocate those funds to people in need, we encourage Pakistan and other countries.

Giving an example, Azour said that the “region spends on social protection 2% of GDP and in certain cases what countries are spending on subsidies could be the double of that.

“Therefore, it’s very important to use this moment where challenges are mounting, where increase in prices is hurting, to reallocate the resources for those who need it most,” he said.