Unlocking the chains of debt: speakers demand creation of parliamentary debt audit commission

28 September 2015 by The News

Islamabad: Pakistan’s economy has been paralysed by an unpayable and largely unjust debt burden that is preventing the country from reaching its poverty goals and hindering the development of democracy, says a paper launched by Islamic Relief Pakistan here on Wednesday during a conference on Pakistan’s national debt.

The event was attended by members of parliament, diplomats, members of civil society, academia and media. Islamic Relief, a relief and development organization, has been running a campaign ‘Unlocking the Chains of Debt,’ which criticizes the International Monitory Fund (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.

http://imf.org
) and International Financial Institutions (IFIs) for the crippling conditions attached to their loans and calls for repayments to be frozen while the legitimacy of all debts are investigated.

The ‘Unlocking the Chains of Debt’ campaign highlighted that Pakistan’s foreign debt burden has reached up to $65 billion. It warns that annual repayments are set to increase dramatically to $6 billion a year and more than three times of what Pakistan currently spends on health and education combined.

The legitimacy of these debts is highly questionable, says the campaign, which are calling for an audit of all debts acquired by Pakistan since 1947 to establish which of them needs to be paid and which ones should be cancelled. The repayment burden is undermining the fight against poverty and is also a serious threat to the country’s economic stability and sovereignty.

While speaking on the occasion, Islamic Relief Pakistan outgoing Country Director Ateeq Rehman said, the people of Pakistan have suffered from a crippling national debt for 40 years. The global financial crisis, the horrific floods of 2010 and the so-called ‘war on terror’ have all made Pakistan’s debt spiral out of control.

“This debt has done little for the majority of Pakistan’s people. It has increased inequality and deepened impoverishment. Today, more than 90 million people (60.19%) live below the poverty line. Over 47% of government revenue is spent on debt payments — three times of what is spent on health and education combined. Currently, each Pakistan owes Rs101,338 of public debt, Ateeq revealed.

Campaign specialist Sarmad Iqbal said Pakistan is trapped into debt and continued reckless borrowing. “As a condition of the loans, public spending has been cut and prices for food and fuel have increased. Meanwhile, richer companies and individuals continue to pay too little in tax. The people of Pakistan must be free to decide upon their own economic future — a future without the crippling burden of inherited debts and IMF-imposed conditions. We demand an independent debt audit commission to decide upon the legitimacy of debts acquired by successive regimes,” he urged.

Abdul Khaliq, focal person CADTM-Pakistan and executive director of the Institute for Social and Economic Justice, unfolded stories one rarely hears in the news — the impact of debt on people’s lives, the extreme economic policies pursued in the name of paying unjust debt, and how people are struggling for a fairer society. “Debts have always been taken in the name of country’s sovereignty,” he added. Pakistan should not mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral.
its future by being forced to borrow for the repayment of old loans, he maintained.

Panelists including Qazi Azmat Isa, CEO of PPAF, stated that it is the prime responsibility of the creditors to be equally accountable for what they fund. Others including I A Rehman, Professor Qais Aslam, Mehfooz Ali Khan, and Taimur Rehman gave views from a civil society perspective on Pakistan debts and agreed that the government needs to do responsible borrowing and the creditors need to do responsible lending. However, there was unanimous agreement that the government of Pakistan should establish an independent debt audit commission to unearth the truth about debts.

The founder of Islamic Relief, Dr. Hany El-Banna, reflected upon the national debt — humanitarian crises and development. MNA Ramesh Kumar highlighted the government’s stance on national debts. “I really appreciate Islamic Relief campaign which is talking about debt-free Pakistan. I will table a resolution in the National Assembly to establish a debt audit commission, he said.” In the end, he was presented a copy of position paper launched by Islamic Relief.

Adnan Cheema, incoming Country Director of IR, claimed that Pakistan needs to become serious if it intends to break the begging bowl. and that can only be done if we get our own house in order. “We believe the first step towards making Pakistan debt-free will be to spread awareness and generate a massive debate on this, and Islamic Relief Pakistan along with its partners, is geared to engage with decision-makers. He thanked the participants for their valuable contributions.


Source : The News

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