(16 Oct 2020)
Dear Prime Minister!
Bourgeoning Debt has turned Pakistan upside down:
Committee for the Abolition of Illegitimate Debts (CADTM) International is a network of progressive organizations, individuals and concerned citizens in 27 countries of the world including Europe, Latin America, Africa and Asia. For the last 30 years it has contributed in many ways to the cause of debt justice (www.cadtm.org). Besides, its valuable research work on the origins and consequences of debt domination, one of the important achievements was its participation of the official Debt Audit Commissions, set up in Ecuador and Greece.
I am writing to you on behalf of Pakistan Chapter of CADTM (www.isej.org.pk) – active since 2010 after the super floods and has been vocal on the issue of much needed debt justice to Pakistan. We have been amplifying the case of Pakistan at national & international levels and exploring for the technical and political options for the cancellation of Pakistan’ illegitimate debts. Our humble contribution is highlighting the issue of debt justice among media and civil society in Pakistan. As a result, the Senate of Pakistan and Lahore High Bar passed respective resolutions for debt cancellation in 2010.
While Global Week of Action (GWA) 2020 for the Cancellation of Debts is being observed (10-17 October) across the continents and countries, we as debt justice campaigners in Pakistan like to take this opportunity to write to you at a critical juncture, when Pakistan is facing serious debt crisis. Despite your sincere efforts to divorce Pakistan’s chronic debt dependency, country’s mounting debt still remains a big problem. We have taken note of your recent statements and efforts; which is a positive contribution towards the issue of global debt justice.
Sir, you are the first Prime Minister who formally launched international appeal for debt relief to developing countries, severely hit by the economic slump in result of Covid-19 Pandemic. It was good to note that as result of your timely appeal G-20 announced temporary debt relief to 73 countries, including Pakistan. It is appreciable and is lauded by the global debt justice campaigners. The debt relief announced by G20 bilateral creditors is positive gesture but can’t be termed as a step forward because it is not a cancellation, but mere a short-term postponement of payment. This only concerns bilateral debt and therefore excludes a large part of the debts, Pakistan owed to multilateral and private sector.
Sir! Rising Public debts is the center of global debate at this juncture of time. Many indebted nations and civil society in several developing countries are crying for debt justice amidst global debt crisis. For sustainable debt resolution mechanisms, the processes of independent public debt audits are being initiated in different countries toassess the legality of all the loans, in order tohammer out strategies for the cancellation of the illegitimate debts.
It is sad to note amidst these testing times, nothing is crueler than forcing an over indebted country like Pakistan to contract further loans to boost Covid-19 response. Instead of joining the global debt relief efforts private lenders have so far refused to cancel or suspend any of the debt they claim. Similarly, multilateral development banks, such as the World Bank, have also failed to cancel debt.
To our understanding this is high time to stop further borrowing from IFIs and focus our on-going efforts towards comprehensive debt relief. We are really concerned about the recent loaning of $1.5 billion from IMF under Emergency Fund. Under this scenario,in next 20 months (Nov 2020 to June 2023) Pakistan would be paying back the due amount of around $ 27.8 billion to the creditors including major amount of $19.4 billion IMF, WB, ADB and China (CPEC loans).
Prime Minister! Who knows betterthan youthat indicators of severe debt crisis were already there in Pakistan much before outbreak of COVID-19 Pandemic? The COVID-19 has merely served as detonator of this crisis and not its cause. After years of years neo-liberal offensive, Pakistan debt burden is now unstoppable, pushing the country into perfect debt trap. Our current external debt stands at $ 111 billion with bilateral debt 48.4%, and multilateral 38.1%. The debt-to GDP ratio as high as 90%, which is clear violation of the Debt &Fiscal Limitation Act 2005.
Much of this foreign debt accrued over the decades, we believe, is illegitimate, because during previous governments. We think it was lent and borrowed irresponsibly and unfairly, driven by predatory lending, used to finance harmful projects and policies, failing to comply with legal and democratic requirements, saddled with onerous and unjust terms, incurred by private corporations but assumed by govts or incurred through public guarantees of private profits, wasted or stolen.
These conditions shine a strong light on the continuing debt problem that stands in the way of people’s survival, the fight against poverty, inequality, the realization of their human rights, sovereignty, economic, gender and ecological justice, and the pursuit of a dignified life. Given the urgency and severity of the crisis we face, the responses to the debt problem have been insufficient.
Sir! We intend to bring in your notice that working classes have been forced to bear the brunt of the bourgeoning debt in the shape multiple govts steps; hike in energy prices, inflation, joblessness and privatization of state services. We understand IFIs and credit agencies tend to present rosy picture under the garb of the self-serving theories of “debt sustainability” of Pakistan. However, it is hard to understand how Pakistan would be able to pay back over $ 1 billion per month for the next two years?
- While recognizing your on-going efforts to resolve Pakistan’s debt problem, we urge your call to be more inclusive by demanding immediate cancellation of all principal, interest and other charges on bilateral and multilateral debts for at least next four years till June 2024 as first step.
- While appreciating constitution of the Pakistan Commission of Inquiry Act, 2017 to probe into loans taken by the governments during the last 10 years, we would like to suggest you the formation of an independent and impartial parliamentary Debt Audit Commission, to critically examine the nature, purpose, terms and conditions of loans, covering the period till 1980.
- The proposed Debt Audit Commission should be consisting of representation of political parties and debt experts. With clear mandate, such commission must be backed by the Presidential decree and have powers to dig out all the foreign loans secured by successive govts and dictators.
- Last, but not least, we feel public support is always crucial for championing the social justice causes; Please count our technical support and sincere efforts to highlight the case of Debt Justice for Pakistan at international level.
Focal person CADTM-Pakistan