The terrible flooding which has gripped Pakistan is having an impact on tens of millions of people, in a country where 60% of the population is already living below the poverty line.
Donations to help the situation are vital. But Pakistan will need more than aid if it is to emerge from this crisis, and to fight the long-term poverty that has blighted that country for so long.
Western countries like our own have a responsibility to lift Pakistan’s debt burden which is unjust and totally unpayable.
For many years Pakistan was run by undemocratic regimes, who were kept in power with Western support, including through large loans which did little for ordinary people. Today this history of reckless lending means Pakistan repays its loans at a rate of $3 billion every year.
Indeed, part of the recently announced assistance to Pakistan includes nearly $3 billion of new loans from the World Bank and Asian Development Bank. This will only add to Pakistan’s enormous and unsustainable $49 billion debt.
Pakistan should not have to mortgage its future by being forced to borrow for relief.
Western countries and institutions must take responsibility for their role in Pakistan’s troubled history. Join us in calling on the British Government to ensure that Pakistan receives justice as well as charity.
Only such an approach will ensure that Pakistan is able to withstand similar natural disasters when they happen in the future.
TAKE ACTION: TELL ANDREW MITCHELL AND GEORGE OSBORNE TO DROP THE DEBT.
We are asking the Government to:
Call on all bilateral and multilateral creditors to institute a two year moratorium with no interest accrual on all of Pakistan’s debt payments to free up $3 billion per year for recovery. This should be a first step towards permanent debt cancellation.
Use their World Bank seat to ensure that Pakistan is given aid in the form of grants not loans. We think this accords with the Government’s pre-election policy paper on International Development, ‘One World Conservatism’, to give grants rather than loans wherever possible and encourage the World Bank to do the same.
Support the auditing of Pakistan’s debt to examine the legitimacy of these debts, and cancel those found to be unjust.
Jubilee Debt Campaign
Campaigners call for debt cancellation for Pakistan
23 August 2010
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:
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.
Ensure that emergency disaster-related assistance, wherever possible, be in the form of grants instead of loans.
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.