As Pakistan struggles to respond to catastrophic floods, protesters gathered in Lahore on September 1 to demand the suspension of the country’s external debt repayments.
The protest was organised by the Pakistan Kissan Rabita Committee (PKRC), a network of small farmers’ organisations, in collaboration with the Asian People's Movement on Debt and Development.
Protesters carried placards with the slogans “Say No to IMF and World Bank”, “Suspend Debt Repatriation”, and “Debt Repayment during calamity is crime against people of Pakistan”.
Devastating floods have killed 1500 people, displaced more than 50 million and caused 1 million livestock deaths. In addition, 1 million houses have been washed away and 90% of agricultural crops damaged, signalling an impending food crisis.
The unprecedented floods caused US$10 billion in economic losses. Yet external debts make it almost impossible for the government to focus on flood relief and rehabilitation.
Pakistan is one of 52 countries facing a severe debt crisis. The most critical problem faced by the economy is servicing of external debt. Pakistan is expected to repay about US$38 billion in loan repayments to the International Monetary Fund, the World Bank and other financial institutions, including Chinese banks, by the end of this year.
Total debts and liabilities rose by Rs11.85 trillion this financial year, according to data released by the State Bank of Pakistan. It was required to pay $15.1 billion in external debt servicing this financial year, compared to $13.4 billion in the previous financial year. Interest amounted to about 25% of the principal.
Lidy Nacpil, coordinator of Asian Peoples’ Movement on Debt and Development, told the protest: “The multiple crises — of COVID-19, its economic impacts exacerbating pre-pandemic hardships, and the escalating climate emergency — are already more than enough reason for the cancellation of the debts of Pakistan and all other countries of the Global South. The devastating floods in Pakistan have rendered it even more urgent.
“It would be utterly inhumane for lenders — public and private — to fail to respond to this demand. We also call on governments of rich countries to meet their full obligations to deliver on Climate Finance, for Pakistan and all countries of the Global South.”
Nasir Iqbal, PKRC organiser, said: “We demand a suspension of debt repayments and a cancellation of the debt since Pakistan is no longer in a position to repay its loans and these floods have worsened the condition of the country's economy.”
“Pakistan needs at least four years to rebuild and reconstruct its economy and to cover up the damages done by floods and heavy rains,” said Saima Zia from PKRC. “This demand has a legitimate legal argument based on international law, which calls for suspension of debt payments on the grounds of necessity and fundamental change of circumstances.”
PKRC general secretary Farooq Tariq told the protest: “The delivery of adequate, additional, public and non-debt-creating Climate Finance for mitigation, adaptation and loss and damage is as urgent as are public financing of measures to fight the flood crisis and provide economic assistance for those whose jobs, livelihoods and well being are most affected.
“Finance is also needed for programs to build more just, equitable, resilient and sustainable economies, which are the foundations for solving these multiple crises.”