Cancel all bilateral and multilateral debt to Pak: Oxfam
International aid agency Oxfam has warned that the International Monetary Fund's (IMF) latest instalment of USD 450 million loan to flood-ravaged Pakistan would risk plunging the country into debt that it can ill afford.
In a statement issued yesterday, the aid group demanded cancellation of all multilateral and bilateral loans to Pakistan, and that debt relief be given on emergency assistance from the IMF.
"After a week of talks with the IMF, Pakistan has not been given what it needs to recover from a disaster of this magnitude. This is a disappointingly inadequate response. Pakistan can not be expected to service debt as it struggles to cope," Elizabeth Stuart, a senior policy advisor at Oxfam, said.
Pakistan's external debt in 2010 amounted to USD 54.3 billion. The largest multilateral creditors are the Asian Development Bank, the World Bank and the IMF, while the largest bilateral creditors are Japan, Germany, France and the US.
"A third of Pakistan's budget revenues are currently spent on loan repayments. Pakistan's resources must now be directed at recovery from this disaster, and a debt burden can not be allowed to impede recovery. The IMF together with all other multilateral and bilateral creditors should cancel the country's debts," Stuart said.
Money that would otherwise have been paid on debt service must be used to pay for reconstruction and poverty reduction, for example through a transparent line in the country's budget which could be monitored by local civil society, Oxfam said.The Pakistan government should also review its own budget allocations to ensure it is investing sufficiently in reconstruction and poverty alleviation, it said.
More than 17 million people have now been affected by the floods, with more than five million people left homeless after their homes were washed away by the waters.
"Rebuilding will take years and billions of dollars, and a willingness on the part of the international community to help Pakistan get back on its feet," she noted.
