Debt restructuring with IFIs urged
Within 60 days of the approval of FRDL (Amendment) Act 2021, the federal government will establish an office to be called debt management office. photo: file
Pakistan contributes little to global warming in terms of greenhouse emissions and is yet one of the biggest victims of climate change brought about by emissions from developed countries. The country must undertake negotiation of debt restructuring with the International Financial Institutions (IFIs) and friendly countries in order to create fiscal space for flood relief and reconstruction of infrastructure, urged the Pakistani business community.
“The federal and provincial governments must act swiftly in the aftermath of the floods to protect the economy and people from irreversible damage,” said Irfan Iqbal Sheikh, President of the Federation of Pakistan Chamber of Commerce and Industries (FPCCI) in a statement.
“The government should negotiate the restructuring of external debts with the IMF, World Bank, ADB, IDB, Paris Club and friendly countries,” he added.
Speaking to the Express Tribune, Abid Qaiyum Suleri former member of the Prime Minister’s Economic Advisory Council said, “The World Bank has already taken various steps for restructuring and redirecting different loan programs after the flood situation in Pakistan.”
“However, the government shall take up the matter with the IMF whose recent staff level agreement report does not contain a single word on the flood situation in Pakistan, even though a flood emergency has been declared in the country,” he noted.
“The Ministry of Finance must raise the issue of the widespread impact of the climate disaster. Although we need to assess the colossal loss, we can use some estimated figures to make our case before the IMF to secure some sort of flexibility and relaxation on the loan,” proposed Suleri.
“The detailed damage assessment should start immediately at every district, tehsil and village. Multilateral and bilateral donor conferences should be held and findings should be professionally and transparently presented to generate substantial donations from the international community,” president FPCCI posited.
“It is crucial to raise the issue of climate disaster with all these institutions that have acknowledged that Pakistan needs help and support for disaster management and rehabilitation of flood affectees,” said Zulfikar Thaver, President of the Union of Small and Medium Enterprises (UNISAME).
“Given the devastation from floods and expected rehabilitation and reconstruction, the government needs to create fiscal space to smoothly run relief operations across the country,” said Arif Habib Limited (AHL) Head of Research, Tahir Abbas. In addition, the government may also renegotiate with the IMF and other multilateral and bilateral lenders for some relaxation in the debt repayments, he added.
Keeping in view the hardships being faced by the citizens and the industrial community of Pakistan due to the enormous impact of the flash floods, the Karachi Chamber of Commerce and Industry (KCCI) President, Muhammad Idrees fervently appealed to the Prime Minister Shehbaz Sharif to “issue directives for the extension of the last date of payment of electricity bills for the entire country. In the ongoing extraordinary situation, neither the business and industrial community nor the poor masses are in a position to pay their bills.”
Published in The Express Tribune, September 6th, 2022.
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