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IMF, Friendly Countries Cannot Solve Pakistan's Problems: Defense Minister

© AP Photo / Rahmat GulAn Afghan youth gives alms to a beggar woman in Daman-e-Koh park, north of Islamabad, Pakistan, Thursday, Feb. 9, 2023.
An Afghan youth gives alms to a beggar woman in Daman-e-Koh park, north of Islamabad, Pakistan, Thursday, Feb. 9, 2023. - Sputnik India, 1920, 21.02.2023
Pakistan is facing a serious economic crisis and seeks monetary aid from the IMF to avoid bankruptcy. However, so far the Washington-based lender has not released a bail-out program, and Pakistan’s minister of defense has said that the country has already defaulted.
On the sidelines of the Munich Security Conference, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), spoke about Pakistan to a German publication saying that the IMF wants to support the poor people of the country.

"My heart goes out to the people in Pakistan. They have been devastated by the floods that affected one-third of the population of the country," Georgeiva said.

She explained that the IMF "wants the poor people of Pakistan to be protected" and the government’s subsidies should not be beneficial to the rich people of the country.

"What we are asking is for Pakistan to take the necessary steps to be able to function as a country and not to get into a dangerous place where its debt needs to be restructured," the director added.

She added that she and her colleagues on the IMF are eager to ensure that the wealthy in Pakistan do what they can to help the country.
 A vendor waits for customers at a market in Islamabad, Pakistan, on Jan. 22, 2022. - Sputnik India, 1920, 17.02.2023
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"Those who can, those who are making good money [in the] public sector, private sectors - they need to contribute to the economy," Georgeiva added.

She further explained that the IMF is opposed to Pakistan's wealthy benefiting from subsidies.
The managing director's statement comes as the country remains in talks with the fund for recommencement of the blocked Extended Fund Facility (EFF), a bail-out program that has become crucial in light of Pakistan's fast-depleting foreign exchange reserves.

Is the Country Defaulting?

While the IMF chief was debating Pakistan's economy in Munich, Pakistan's Defense Minister Khawaja Asif proclaimed that the country is already bankrupt.
Speaking at a private college ceremony in the city of Sialkot on Saturday, Khawaja said that Pakistan has already defaulted.

"We are living in a bankrupt country. Everyone - including the establishment, bureaucracy, and politicians - are responsible for it," Khawaja said in a televised speech.

The defense minister added that being able to stand on one’s own feet was a prerequisite to becoming a stable country.

"The solution to our problems lies within the four walls of our home. The IMF or the friendly countries that we appeal to for monetary aid do not have solutions to Pakistan’s problems. Only we have them," he stressed.

Furthermore, the leading member of the Pakistan Muslim League (Nawaz), criticized the lifestyle of the country's elite saying that there are lots of golf clubs in the country where the rich and powerful come to relax. He suggested that selling just two such golf clubs built on hundreds of acres of expensive government land could pay a quarter of Pakistan's debt.
People jostle to buy subsidized sacks of wheat-flour from a sale point in Quetta, Pakistan, Thursday, Jan. 12, 2023. - Sputnik India, 1920, 12.02.2023
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He singled out for criticism the real estate mafia who keep grabbing land from the poor to make more money.
The minister also spoke about the country's terrorism problem and blamed the previous government for allowing unrest to grow.

Wave of Inflation

The minister's speech comes as the country faces unprecedented inflation. Just last week the government increased the price of fuel by 22.20 rupees ($0.0835) a liter to 272 rupees ($1.02) because the country's currency plummeted.
The increase is said to help the government generate Rs310Bln ($1.2Bln) from consumers in the second half of the current fiscal year and slow down the build-up in gas sector debt. Another rise in gas prices is expected in July.
PTI Chairman Imran Khan attends the Oath Ceremony in Gujranwala - Sputnik India, 1920, 16.02.2023
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Both the petrol and gas price hikes were among the IMF's preconditions for it to restart its stalled bail-out package.
But the price hikes are putting people in a dire situation as since last year, official consumer price inflation has recorded a cumulative increase of 33 percent. It means that if a Pakistani was earning Rs100,000 a year ago, his or her nominal income has a purchasing power today of Rs67,000.
In light of this, raising the burden of taxes on an already struggling economy will shrink the economy further, causing more unemployment and poverty. The situation is made still worse by a wave of unemployment as businesses close because of the economic collapse.
Pakistani officials further shocked the public last week by imposing new tariffs to raise Rs170Bln ($650Bln) through a mini-budget law. That decision has further affected households that were already reeling from the tremendous inflation.