HRW urges IMF to protect Pakistan’s vulnerable people

HRW urges IMF to protect Pakistan's vulnerable people
A produce vendor waits for customers at a market in Islamabad, Pakistan, on January 22, 2022. © 2022 AP Photo/Rahmat Gul, File.

NEW YORK, Feb 08 (APP):Human Rights Watch (HRW), a New York-based watchdog body, Tuesday urged the International Monetary Fund (IMF), to work with Pakistan’s government to protect the economically disadvantaged by broadening social protection systems and minimizing reform measures that risk further harm to the most vulnerable people, as the country faces its worst economic crisis.

Formal negotiations between the Pakistani government and the IMF team began on February 1, 2023, to discuss a plan to rescue the economy, including an installment of US$1.1 billion in loans from a $6.5 billion bailout that had been designed to ward off economic meltdown in 2019.

“The IMF and the Pakistani government have a responsibility to address this crisis in a way that prioritizes and protects low-income people,” Patricia Gossman, Associate Asia director at Human Rights Watch, said. .

Pakistan’s State Bank foreign exchange reserves decreased by 16 percent, to $3 billion, in the week ending January 27, an amount covering less than three weeks of imports, with the acute shortages of foreign currency making many imports, including essential medicines scarce or unobtainable.

Pakistan is facing its highest inflation levels since 1975, with the cost of perishable food items rising more than 60 percent in January, it said, and inflation expected to continue to rise.

In response to IMF demands, on January 29, the government increased fuel prices and removed a cap on the foreign exchange rate, leading to a drastic depreciation of the Pakistan rupee’s value, including a 9.6 percent loss in one day in January.

Pakistan’s deepening economic crisis comes amid devastation caused by cataclysmic floods. Floods in August 2022 killed over 1,700 people and destroyed hundreds of thousands of homes and millions of acres of crops, affecting more than 30 million Pakistanis and causing billions of dollars in damage. Forty percent of Pakistan’s 230 million people faced food insecurity in 2020, yet only 8.9 million families received assistance to mitigate the impact of rampant inflation. Rural areas were particularly hard-hit by the floods.

The IMF programme should conduct a thorough assessment of the direct and indirect impact these adjustments would have on low-income people and adequately mitigate them, Human Rights Watch said. It should use part of the anticipated savings to strengthen social safety nets by including a structural benchmark to significantly broaden coverage and increase social spending. The IMF should urge Pakistan’s government to enact policies to increase women’s access to employment by reducing barriers, including by providing state-funded maternity leave and access to affordable menstrual hygiene, HRW said.

New tax measures should be progressive in nature and should not exacerbate inequality and increase the cost of living in ways that undermine rights, it said. Any cuts in subsidies for electricity, fuel, and natural gas should be preceded by a comprehensive reform plan that ensures everyone is able to access energy supplies essential for basic rights.

The IMF’s recommendations should encourage government spending on social services, such as education, health care, and poverty-reduction programmres while shoring up government revenues by improving the tax collection infrastructure and adopting stringent and transparent accountability measures, HRW said.

The IMF should use its procedures to make needed funds available as soon as possible, putting into place safeguards to protect people’s economic and social rights, it added.

Pakistan’s negotiations with the IMF, which continue through February 9, are meant to clear the IMF’s ninth review of its Extended Fund Facility, aimed at helping countries with balance-of-payments crises. The IMF bailout installment would ease the crippling shortage of foreign exchange and unlock access to other funding, including from multilateral and bilateral donors.

“Pakistan’s government should use the influx of funds to expand support for those worst- affected by the economic crisis,” Ms. Gossman said. “The IMF should provide Pakistan the time and flexibility to achieve a sustainable, inclusive, and rights-based recovery.”

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