Campaigners Call for Immediate Debt Cancellation for Pakistan

PRESS RELEASE, 14 September 2010

Issued by Debt and Development Coalition Ireland

Debt cancellation campaigners today called for immediate and unconditional debt cancellation for Pakistan. Debt and Development Coalition Ireland highlighted that since being hit by disastrous floods, Pakistan still owes €42 billion to external lenders and pays out a third of its revenue each year in interest repayments on debt. This is despite the fact that over 20 million Pakistani people are suffering loss of livelihoods, homelessness and illnesses, pushing Pakistan to the brink of collapse.

Nessa Ní Chasaide, Co-ordinator of Debt and Development Coalition Ireland (DDCI) commented, “As the ‘Paris Club’ of rich governmental lenders prepare to meet on Wednesday, we call on the Irish government and all international lenders to support immediate, unconditional debt cancellation for Pakistan. This will ensure that donor countries are not hypocritically giving aid money with one hand and taking it back with the other.”

Much of Pakistan’s debt has built up over decades of reckless lending to undemocratic regimes which had little positive benefit to the people of Pakistan. The biggest international lending institutions to Pakistan – of which Ireland is a member – are: the Asian Development Bank, the World Bank and the International Monetary Fund (IMF). The largest governmental lenders to Pakistan include: Japan, France, Germany, and the US.

Ms Ní Chasaide continued, “Lenders have lent money recklessly to Pakistan in the past. Now Ireland should do the right thing and call for cancellation of these unpayable and illegitimate debts and commit to supporting wider international action to tackle unpayable and illegitimate debts in the new international debt policy currently being drafted by government.”

She further highlighted, “It is shocking that Pakistan is now being pushed further into debt at this devastating time through new loans recently extended by the World Bank, IMF and Asia Development Bank. Ireland should support grant based finance for Pakistan with no strings attached, rather than forcing Pakistan to mortgage its peoples’ futures once again.”

DDCI highlighted its support for Pakistani civil society organisations that are calling for faster, scaled up aid delivery and equitable spending of aid and any debt cancellation resources.

Notes to the Editor

• Pakistan’s external debts is € 42 billion:

Largest multi-lateral lenders: World Bank: US$ 11.5 billion; Asia Development Bank: US$ 9 billion; IMF US$ 5.1 billion.

Largest bi-lateral (governmental) lenders: Japan: US$6.67 billion; France: US$ 2.17 billion; Germany US$ 1.82 billion; USA: US$ 1.51 billion; China: US$ 1.88 billion

Source: http://www.eurodad.org/whatsnew/articles.aspx?id=4228

The Paris club is an informal but powerful grouping of governmental lenders: http://www.clubdeparis.org/

• Pakistan’s debt rose rapidly under the military regime of General Musharraf (2001-8) from $32 to nearly $50 billion. 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’: http://www.cadtm.org/Newsletter

• Ireland published an international debt policy in 2002 which supports debt cancellation for the poorest countries. Ireland is currently revising the policy. Debt and Development Coalition Ireland is calling on the Irish government to support in its new policy: massively increased debt cancellation for impoverished countries; a commitment to tackle illegitimate debts and an end to the damaging policy conditions advocated by the World Bank and IMF of which Ireland is a member; and a commitment to build just, responsible and binding international financing standards.

• The UN appeal for $460 million is currently only 64% funded. Oxfam estimate that the flooding in Pakistan has affected more people than the Indian Ocean tsunami, the Haiti earthquake and the 2005 Kashmir earthquake all together: http://www.oxfam.org.uk/applications/blogs/pressoffice/2010/09/02/pakistan-oxfam-calls-for-debt-cancellation-to-aid-recovery/

• See briefing produced by DDCI partner organisation Jubilee Debt Campaign UK ‘Fuelling Injustice: The Cost of ‘third world debt’ to Muslim countries’ http://www.jubileedebtcampaign.org.uk/.