There is a common view that the IMF is against subsidies. That is incorrect.
CHANTILLY, VA, US: Your editorial of June 3 titled “GDP growth: Falling short” is very well put. The Benazir Income Support Programme is one such safety net, although its reach is not clear — and its name is unfortunate since if there is a new government, the scheme is likely to be abandoned. There is the NADRA database as well as the zakat database. It is no rocket science to target the poor even if you miss 20-30 per cent of them at the first attempt.
Yes, other countries have better social safety nets. However, they also have fiscal subsidies, as inefficient as they may be. But they manage to provide subsidies and direct assistance while keeping their fiscal house in order. The trade-off is simple. If you cannot do that, you end up taxing the poor through higher inflation. There is a common view that the IMF is against subsidies. That is incorrect. The IMF has no problem with a subsidy that is well-targeted, reaches the right households, and is fully financed. Indeed, the IMF’s fiscal affairs department have experts in this very field. It is the government which is not interested. They would rather prefer to pass the buck onto the IMF.
Meekal Ahmed
Published in The Express Tribune, June 4th, 2011.
