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Campaigners Call For Debt Cancellation For Pakistan
Writers Articles And Opinions

31 August 2010

By Dany Ross

Debt activists fear that aid will be dwarfed by debt repayments and issue warning over new loans.

Anti-poverty campaigners today called on governments and international institutions to effect an immediate freeze on Pakistan's debt repayments, expressing fears that Pakistan's annual $3billion would dwarf current levels of emergency aid. They also expressed concern that international institutions like the World Bank had promised nearly $3 billion in new loans to Pakistan to withstand the disaster, rather than giving grant-aid. Jubilee Debt Campaign says this will only add to Pakistan's enormous and unsustainable debt of $49 billion debt.

Pakistan's debt repayments already amount to three times what the government spends on healthcare - in a country where 38% of under 5-year-olds are underweight, only 54% of people are literate, and 60% live below the poverty line. The United Nations says it has only raised 70% of the $460 million called for in emergency aid by the institution. But even this amount will be dwarfed by debt repayments unless serious relief is instituted. 

Longer term, the World Bank and Asian Development Bank recently announced loans of $900 million and $2 billion respectively. Campaigners say grants, rather than loans, are essential if countries like Pakistan are ever to develop the means to withstand such disasters in future.

Pakistan's debt rose rapidly under the military regime of General Musharraf (2001-8) from $32 to nearly $50 billion. In fact campaigners point out that the vast majority of Pakistan's loans were run up under military governments, many offering little benefit to ordinary people. Pakistani groups like CADTM-Pakistan have long called for an audit of the debts, saying it is unjust for the poor of Pakistan to repay reckless loans that borrowers should never have lent. The group is currently calling on their government to repudiate its debts on the basis of a ‘state of necessity'.  

Nick Dearden, Director of Jubilee Debt Campaign said:

"It is nothing short of criminal that a country as poor as Pakistan is bled of resources every year to repay borrowers who extended unjust loans to that country over decades. It is vital that desperately needed emergency aid is not effectively swallowed up in debt repayments and a freeze on such payments must be called immediately.

"But the international community also needs to accept responsibility for the poverty of Pakistan. If Pakistan is to build up the infrastructure to withstand such appalling disasters in future it must be freed from its debt trap. A debt audit is needed - and those debts found to be unjust and unbeneficial must be cancelled immediately to give the country a fresh start. Most certainly supposedly anti-poverty institutions like the World Bank should not be making Pakistan's debts even worse." 

Jubilee Debt Campaign calls on the British government to:

  1. Call on all bilateral and multilateral creditors to immediately institute at least a two year moratorium with no accrued interest on all debt service payments from Pakistan. All of Pakistan's resources should be directed at recovery, not repayment.
  2. Ensure that emergency disaster-related assistance, wherever possible, be in the form of grants instead of loans. 
  3. Lead efforts to establish up-front funding for climate change-related disaster preparation. With early warning systems, risk analysis, and preparation, Pakistan could have dramatically reduced the damage caused. 

For a full background on Pakistan's debt, read our new report 'Fuelling Injustice'. For more on CADTM's work, take a look at this report in the Pakistani media. Also take a look at this fantastic article by Omar Warwaich from the Independent.

 

 

EsinIslam.Com

 
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