Pakistan must refuse debt
repayments, divert amount for relief & rehabilitation of flood-hit
communities:
Pakistan must
refuse to pay the foreign debts and divert the amount into the relief
and rehabilitation of the flood affectees. It is high time to change the
priorities of the national budget and all those suggesting to cut the
development budget and spend on flood affectees be stopped. There is an
easy way out. Stop paying the debts owed to International Finance
Institutions, donor countries and club.Pakistan is facing the worst
disaster of its history. About 20 million of its population is badly
affected by the recent huge devastation caused by angry floods. Major
infrastructure is totally destroyed in major parts of the country. The
country has suffered a loss of about Rs250 billion only in the
agricultural and livestock sectors and the flood recovery costs may run
into billions of dollars. Pakistan is in real and worst human and
economic crisis. Though international donors are announcing commitments
for relief and rehabilitation, but these are peanuts vis-ŕ-vis the
degree of catastrophe.
We think this is the
time, instead of begging for much-needed aid for relief and
rehabilitation, Pakistan must stand up and announce unilateral
suspension of repayment of foreign debts, owed to IFIs, donor countries
and clubs. Currently Pakistan is paying about $ 3 billion on debt
servicing every year. As Pakistan present foreign debt of $ 54 billion
is increasing, the debt servicing will be up by the same ratio. Under
the prevailing critical circumstances, we have to think about coping
with this severe debt domination. Various laws and international
protocols favor if Pakistan refuse to pay its debts right now,
especially under the prevailing horrible circumstances, Pakistan is
passing through. To refuse payment of debts is not a new thing; many
poor countries used this just and lawful right in the past.
There are spaces in
international law that can be invoked as legal justification to refuse
the external debt. One of these justifications is called “State of
Necessity”. This rule is characterized by a situation that jeopardizes
the economic or its political survival- such as the situations which
creates the factor of impossibility of fulfilling the very basic needs
of the populations (health, education, food, water, housing etc). The
"State of Necessity" justifies the repudiating of debt, since it implies
the establishing priorities among different obligations of the state.
Therefore, a natural calamity-like the one hitting Pakistan now creates
the very factor of “State of Necessity”. The UN Human Rights Commission
has adopted numerous resolutions on the issue of debt and structural
adjustment. One such resolution was adopted in 1999, asserts that “The
exercise of the basic rights of the people of the debtor countries to
food, housing, clothing, employment, education, health services and a
healthy environment cannot be subordinated to the implementation of the
structural adjustment policies, growth programs and economic reforms”
Right now, state of
Pakistan is no longer able to fulfill fundamental human needs of its
flood-hit 20 million population. Pakistan is simply unable to repay or
service its debt responsibilities. We cannot put our people at the mercy
of this natural calamity, that is enormous than Tsunami. The first and
foremost thing in such circumstances is the fulfillments of the all
fundamental human needs of the populations, hit
by natural calamities
and disasters. So this is high time for Pakistan to stand up to its
creditors and say a big NO. Pakistan had already lost one such just
opportunity in 2005 when devastating quake hit Kashmir, leaving millions
of people in misery. This time it is more lethal calamity, and we should
no more be silent. Latin American countries including Argentine,
Burkina Faso, Peru, Mexico, Paraguay, and Ecuador took such positions in
the past. Very recent IMF had to cancel all its debt, US $ 268 million
owed by Haiti, after devastating earthquake hit Haiti in 2009.
The cancellation is
given via the newly established Post-Catastrophe Debt Relief Trust Fund,
which was set up for this purpose and which can now be accessed by other
indebted, low income countries hit by disasters. Another example is
Argentine. The country went into serious crisis after 2001 economic
crisis. Though Argentine leaders had always implemented unpopular
policies dictated by IMF, it was the people of Argentine who come on the
roads in 2001 to protest the debt domination. This popular action
succeeded in altering the history. As a result country’s president
announced the biggest unilateral suspension of foreign debt in history,
a total of more than $ 80 billion, owed to private creditors, countries
and Paris Club. Thus Argentine demonstrated that a country could stop
debt repayments for a lengthy period of time. Pakistan’s total
debt-to-GDP ratio has crossed 61 percent this fiscal year, breaching the
60 percent limit set under the Fiscal Responsibility and Debt Limitation
Act. According to World Bank if Debt-to-GDP ratio exceeds the limit of
80%, the default is sure.
The major portion of
budget is consumed by two Ds; Debt-servicing and Defense. We have to
review allocations against these two Ds. Under the circumstances, there
is no denying the fact that Pakistan’s single source of economy
vulnerability is debt crisis. We do not have any other option to come
out of this economic but to refuse repayment of debts.
We demand that this is
high time for the State of Pakistan to announce unilateral suspension of
the all external debts and divert that amount for the relief and
rehabilitation of 20 million flood-hit people. The government should
approach the newly created Post-Catastrophe Debt Relief trust Fund to
get its foreign debt liabilities cancelled. The Government can also
invoke the international protocol of “State of Necessity”, introduced by
UN Human Rights Commission in 1999, to refuse payment of debts.As
government is planning to review economic priorities and budget
allocations, it must take steps to reduce military budget, cut
non-development expenditures and other unnecessary heads. The amount,
thus saved be shifted to social sector. We also demand that
International Financial institutions and donor countries must repudiate
the debt of Pakistan.
Addressed
Abdul Khaliq Shah
03219402325
Farooq Tariq Labour
Relief Campaign
25-A Davis Road Lahore
