Pakistan Floods: Oxfam calls for debt cancellation

Responding to news that the IMF will issue a $450 million loan to Pakistan -- which will need to be repaid -- international agency Oxfam warned that the loan would risk plunging Pakistan into debt that it can ill-afford.

“After a week of talks with the IMF, Pakistan has not been given what it needs to recover from a disaster of this magnitude,” Oxfam’s Elizabeth Stuart said. “This is a disappointingly inadequate response. Pakistan cannot be expected to service debt as it struggles to cope.”

Oxfam is calling for the cancellation of all multilateral and bilateral loans to Pakistan, and for debt relief to be given on emergency assistance from the IMF.  

“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 cannot be allowed to impede recovery,” Stuart said. “The IMF together with all other multilateral and bilateral creditors should cancel the country’s debts.”
 
Money that would otherwise have been paid on debt service must be used to pay for reconstruction and poverty reduction, through a transparent line in the country’s budget, for example, which could be monitored by local civil society.

The Pakistan government should also review its own budget allocations to ensure it is investing sufficiently in reconstruction and poverty alleviation.
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,” Stuart said.

Notes to Editors

• Pakistan’s external debt in 2010 amounted to $54.3 billion. The largest multilateral creditors are the Asian Development Bank, the World Bank and the IMF. The largest bilateral creditors are Japan, Germany, France and the US.

• Donors have not responded with anything like the speed or on the scale warranted by a disaster of this magnitude.  The UN’s appeal of $460 million is currently just 64 per cent funded.  

• The flooding has affected more people than the Indian Ocean tsunami, the Haiti earthquake and the 2005 Kashmir earthquake all together. An estimated 17.6 million people have are affected by the floods.

• Oxfam has launched a relief effort in districts throughout KPK, Punjab and Sindh, reaching nearly half a million people with clean water, sanitation kits and hygiene supplies, as well as with cash grants.  

• Oxfam has been working in Pakistan since 1973. We support local partners and work with government authorities to improve the livelihoods of those living in poverty, and provide humanitarian assistance to those affected by disasters and conflict.