Committee for the Abolition of Illegitimate Debt

On 27 July 2012 the ruling PPP and opposition PML-N in Pakistan’s National Assembly, principally agreed to audit the public debt of Pakistan. National Assembly Speaker Dr. Fehmida Mirza approved the formation of the 12-member committee after a resolution unanimously passed by the National Assembly [1]. Syed Kurshid Shah, a member of the treasury benches, moved the resolution, while the senior member of the opposition, Iqbal Ahsan seconded the move. It was a pleasant surprise to many of us in Pakistan. We had been striving to highlight the need for the formation of the Parliamentary body to probe country’ public debt.

The resolution speaks about inquiry into foreign and domestic debt, secured by the state since 1985. So the mandate of the committee is limited; it does not go back to 1947, when Pakistan came into being. The committee can only hold inquiry into foreign and domestic loans taken during the last 27 years by different governments and regimes. So it excludes much-needed probe into the loans secured by three dictators’ Gen Ayub Khan (1959-1969), Gen Yehya Khan (1969-1971) and Gen. Zia-ul-Haq (1977-1988).

Though original mover of the motion, PPP’s Kurshid Shah proposed to start inquiry from 1960 to include the periods of all the four dictators, however PML-Ns’ Ahsan Iqbal called for the probe to begin from 1985, when a civilian cabinet took office under the then military president General Ziaul Haq, rather than from the 1960s as earlier proposed by Mr Shah. After brief debate, the house adopted the motion, which eventually came as a joint motion moved by Mr Ahson Iqbal.

So the newly formed committee named as Special Parliamentary Committee on Foreign and Domestic Loans is to probe into five areas; a) which government had taken b) how much loans, c) from which donor, d) why the loans were taken and e) where the loans were spent during the last 27 years. The mandate of the committee thus includes identifying the name of the donor, size of the loan and name of the government that secured the loan. Thus mandate of the probe is still limited and needs to be expanded with regard to the period and evaluation of legality/illegality.

However, despite the above-mentioned limitations, CADTM-Pakistan has welcome this step and sees it as good beginning and we hope things will further move towards debt audit commission. Pertinent to mention is that in 2010, soon after super floods, CADTM-Pakistan actively participated in the Oxfam Novib -supported civil society campaign to cancel Pakistan foreign debt, which created impact on State and Society to fair extent. Since then the issue of debt refused to die.

Under the banner of this broad-based civil society campaign “Pakistan Debt Cancellation Campaign” (PDCC), the civil society had also demanded to form a debt audit commission in Pakistan. Since then CADTM-Pakistan has been in touch with members of National Assembly belonging to different political parties and feeding them with relevant material on Pakistan Debt. A recent booklet “ IFIs and Debt Politics – Pleading Pakistan’s Case” was provided to over 100 parliamentarians through post.

Though the pace of the Committee work is slow, but not bad. During the last two months the committee has been able to hold one meeting and elected Ms. Shehnaz Wazir Ali as its chairperson, who has directed the ministry of Economic Affairs division to submit the relevant data in categorical form.

The 12-member committee included’ Begum Shehnaz Wazir Ali (Chairperson) Defence Minister Syed Naveed Qamar, Mian Abdul Sattar, Ahsan Iqbal, Rana Tanveer Hussain, Asia Nasir, Hamidyar Hiraj, Abdul Rasheed Godel and Jameela Gilani.

Pertinent to mention is volume of total public debt, which has swelled to $126 billion. Political observers are of the opinion that politicians are not much interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. in the issue of debt. The PPP government is playing game to opposition otherwise it would not go recklessly borrowing from 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 other creditors during the last 4 years. The PML-N opposition, on the other hand, also least interested in curtailing the ever-increasing foreign loans. However, it is only interested in probing foreign loans obtained during the tenure of Gen. Musharraf (their arch rival).

Political observers also expect that the findings of the committee would be interesting and could provide some “ammunition” to political parties to attack any wrongdoing found in ever-burgeoning domestic and foreign debts now estimated at over $126 billion, including external debt standing at over $ 60 billion.

ENDS