US and many other stable economies have opposed Pakistan’s request to IMF to waive off the surcharges.
The International Monetary Firm (IMF) on Monday considered and discussed the request of Pakistan and other lower income countries. The request was to drop or temporarily waive the surcharges.
Pakistan, Argentina, and other low-income countries are pressurizing IMF to either drop or temporarily waive off the surcharges on the loan. The countries have to pay $4 billion in addition to the interest payment.
However, United States, Germany, Switzerland, and other stable economies oppose the request of dropping the surcharges. They argue that IMF should not change its financing model as the global economy is going through major crisis.
IMF spokesperson said that the board discussed the request to change the surcharge policy. However, the board has failed to reach any consensus.
“Overall, views on changes to the surcharge policy continued to diverge, including on the merits of a temporary waiver of surcharges.”
Head of the Global Development Policy Center at Boston University said big economies should rethink their opposition. The poor economies were affected harder by the global economic crisis.
He said: “This is the most urgent time to address a fundamentally flawed business model where the IMF is generating revenues by taxing those most in need.”
The talks between Pakistan and IMF are at a stalemate. IMF is pushing Pakistan on policies and reforms needed to keep the IMF’s targets on track and complete the pending ninth review.
IMF’s Resident Chief in Pakistan Esther Perez Ruiz said
“… a key purpose of program reviews in Pakistan, as in all program countries, is to evaluate both program performance to date, as well as, forward-looking, whether the program is on track or policy measures are needed to meet program targets, advance reform objectives, and maintain macroeconomic stability going forward.”
An IMF review for the release of the next tranche under bailout funding has been pending since September.
Pakistanis hopes IMF decides in favor of Pakistan as US opposes Pakistan’s request to IMF for tax waiver