Lahore, Pakistan, 17th of october 2008

Rally against the Debt

Lahore, Pakistan

20 October 2008 by Abdul Khaliq

In connection with Global Week of Action Against Debts, CADTM-Pakistan organized a protest demo and rally at Shimla Pahari, Lahore press club on Friday, 17th Oct. over 50 social, political and civil society activists, laborers and women participated in the rally. The marcher took a full round of the press club. They were holding banners and placards inscribed with slogans against policies of international financial instititutions. They were raising full-throat slogans against IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
and World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

CADTM-Pakistan focal person Abdul Khaliq and LPP spokesperson Farooq Tariq addressing the marchers said the government of Pakistan should refuse repayment of debts to IFIs and use this amount on social sector. They also demanded of the institution of independent audit commission for inquiry into debts of Pakistan.

They said the debt crisis is structural, where as it had been initially presented as a crisis of insolvency. Of course the indigenous factors, such as the decisions taken by national leaders, corruption etc. have played an important role in the development of this crisis. But it is above all exogenous factors, such as terms of trade, the trans-national companies, and increase of interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation.
, among others, which are responsible for triggering it.

They told the rally participants that the official external debt has never gone down since 1999 when the military regime of General Musharraf took over, although after 9/11, Pakistan received a record aid. The external debt has gone up to $ 45 billion in June 2008 from $ 33 billion in 1999. In fact, Pakistan is the fourth largest borrower of the World Bank and fifth-largest recipient of US aid to foreign nations but even then the country has not been able to reduce external debt.

Its borrowing record is littered with corruption and wasteful spending. Despite the fact that Pakistan is spending an estimated amount of $ 4 billion on debt-servicing every year, the volume of payable Payable A sum of money that one person (debtor) or group of people owes to another (creditor). debt is going up and up., which is a matter of grave concern for conscious citizens of Pakistan

They demanded of the government to refuse payment of loans to multilateral donors and IFIs and use this amount on the improvement of social sector. They also called for debt audit and inquiry into written off loans of influential people of Pakistan.

The rally was terminated in front of Press club gate after one-hour activity. mainstream eclectronic and print media duly covered the event.



Abdul Khaliq

CADTM Pakistan



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