The International Monetary Fund has agreed in principle to lend $5.3 billion to Pakistan over three years.
The money will be used simply to make debt payments, primarily to the IMF itself. The loans are due to be ratified by the IMF’s Board in September, if Pakistan implements IMF economic conditions in the meantime. The exact economic conditions which will be expected of Pakistan have not been released.
This year the Pakistan government is expected to spend $5.6 billion on foreign debt payments, rising to $6.2 billion next year. This is over 20 per cent of government revenue.
Tim Jones, Policy Officer at Jubilee Debt Campaign, said:
“The IMF has been lending to Pakistan for thirty of the last forty years. A new loan will just repeat the failed cycle of bailouts and austerity. We believe that much of Pakistan’s debt is odious, having been run-up by various military regimes. Rather than an IMF loan, Pakistan needs a freeze on debt payments, and a public audit to find out how legitimate the debt is, and to learn lessons to prevent debts increasing again.”
In May 2013, Jubilee Debt Campaign and Islamic Relief published a report[2] on the history of Pakistan’s debt crisis. The report called for:
• A public audit into the debt
• A moratorium on debt payments, and ultimately cancellation of unjust and unsustainable debts
• Lenders such as the IMF to stop demanding regressive tax reforms, and assist Pakistan in collecting tax owed by the wealthy
• An end to military action which is killing thousands of people, increasing extremism, and costing the Pakistani people billions of dollars
• The Pakistan government to be allowed to regulate foreign investment, to prevent unsustainable debts being created
For more information contact Tim Jones on +44 20 7324 4722 or +44 7817 628196
Ends
[1] See http://www.imf.org/external/np/sec/pr/2013/pr13249.htm
[2] Unlocking the chains of debt: A call for debt relief for Pakistan