IMF Firm on Reforms for Pakistan’s Tax, Energy Sectors

A member of the U.S. army surveys the flood damage in Pakistan onboard a Chinook helicopter. U.S. helicopters are used to rescue and deliver humanitarian supplies to flood victims. Photo by: Monica K. Smith / The U.S. Army / CC BY The U.S. ArmyCC BY

Talks between the International Monetary Fund and Pakistan have advanced to policy discussions with the Washington-based lender insisting that the flood-ravaged country needs to implement more energy sector and tax reforms.

IMF representatives and Pakistani officials are meeting in Washington, D.C., for a review of the Asian country’s performance under a USD11.3 billion loan program. IMF is also reviewing Pakistan’s economic prospects following the massive flooding it is still reeling from.

The country would have to implement energy sector and tax reforms if it wants to continue with its IMF loan program, the Dawn reports, citing officials familiar with the talks as sources.

IMF also released a document indicating it is not satisfied with the country’s pre-flood performance. The document noted that the country’s economy is slipping despite making significant progress toward stabilization in recent months, the Dawn says.

Continuous Flood Relief

Aid and relief supplies from the international community are still flowing in for Pakistani flood victims. India has offered to provide an additional USD20 million to flood relief efforts for its neighboring country. Xinhua News says the additional money will be channeled through U.N. agencies.

Abdul Basit, spokesperson for Pakistan’s foreign ministry, said he is not aware of additional aid from India

Basit explained that Pakistan did not accept the initial offer directly from India because “that is our government policy,” CNN reports. 

As Devex reported, Pakistan accepted India’s initial offer of USD5million in aid, which was coursed through the U.N.

Meanwhile, U.S. helicopters began delivering drinking water, flour and fortified biscuits to communities in the Khyber-Pakhtunkhwa province, according to Time magazine. But the U.S. crew was met with “little warmth or enthusiasm” by the villagers, the magazine adds.  

“Although the U.S.’s massive $200 million relief package and its swift on-the-ground assistance have been warmly welcomed by politicians and the media, many Pakistanis remain suspicious of American motives,”  the Time report says, adding that money “can’t buy love for the Americans in Pakistan.”

The magazine notes that the U.S. is providing one of the largest contributions to the Pakistani flood relief effort. In addition to financial assistance, the U.S. also has at least 15 military helicopters air-lifting stranded people and delivering relief supplies from a base in northern Pakistan. The Pentagon announced it will dispatch 18 more helicopters to help with the relief efforts.

But this relief assistance and the U.S.’s Pakistani aid law, which allocates USD7.5 billion for the country, would not win the hearts and minds of Pakistanis, Moeed Yusuf, South Asia adviser for the U.S.-based U.S. Institute of Peace told Time.

“It will not do it because the problem the Pakistanis have with the U.S. is political. So you can throw money at the problem — it will ease your burden, but it will not solve it,” he explained.

Adnan Aurangzeb, former National Assembly member from the Swat Valley district, noted that one of the main problems with U.S.-Pakistani relations is the lack of long-term and concrete assistance such as bridges and dams.

Waive Debt Payments

The head of World Vision Australia, meanwhile, urged the international community to consider waiving some of Pakistan’s foreign debt. Tim Costello announced his proposal at the U.N. conference in Melbourne, Australia. Most delegates at the conference appeared to welcome the idea, with some of them giving Costello a standing ovation, the Sydney Morning Herald says.

Costello explained that Pakistan spends more money on debt service than on its health sector. Governments should consider waiving the country’s debt payments for at least two years to allow Pakistan to use its resources for flood relief and assistance.

About the author

  • Ivy Mungcal

    As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.