Debt activists have said that they fear the aid to Pakistan will be dwarfed by its debt repayments and issued a warning over new loans.
Anti-poverty campaigners yesterday called on governments and international institutions to effect an immediate freeze on Pakistan's debt repayments, expressing fears that the country's annual $3 billion repayments would dwarf current levels of emergency aid. In addition they urged a debt audit followed by a cancellation of some of the debts.
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 $49 billion debt.
Pakistan's debt repayments already amount to three times what the government spends on healthcare - in a country where 38 per cent of under five-year-olds are underweight, only 54 per cent of people are literate, and 60 per cent live below the poverty line. The United Nations says it has only raised 70 per cent 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. 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."