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New report recommends debt-freeze

31 May 2013

REPAYMENT of the $58-billion international debts of Pakistan should be frozen to give the country a chance to reach its poverty goals, and to develop democracy, a new report suggests.

The report, Unlocking the Chains of Debt, produced jointly by the Jubilee Debt Campaign and Islamic Relief, criticises the International Monetary Fund for imposing crippling conditions, and questions the legitimacy of some of the debts. The repayment freeze would allow an audit of all the country's debts, to establish which should be paid and which should be cancelled.

"The repayment burden is undermining the fight against poverty," the report says, "and is also a serious threat to the country's stability."

The country's foreign-debt burden has doubled since 2006, and annual repayments will soon reach $6 billion - equal to a fifth of all its exports, or more than half of the country's health and education budgets.

The director of Jubilee Debt Campaign, Nick Dearden, said: "The majority of debts that Pakistan supposedly owes to the world have done nothing to help the majority of the country's people, from funding useless and damaging irrigation projects to propping up dictators and using natural disasters to push more loans on the country.

"Pakistan has had enough of this kind of 'help' from Western institutions like the IMF, which has pushed ever more unpayable loans, attached to damaging and undemocratic policies. Pakistan would be better advised to mobilise its own resources to build a more equal, balanced, and stable country."

The report also calls for progressive taxation reforms, to ensure that the wealthy in Pakistan contribute more to providing the government with the revenue it needs to tackle poverty and increase equality.

The country director for Islamic Relief in Pakistan, Dr Fayaz Ahmad, said: "More than 50 million people in Pakistan live below the poverty line. Efforts to tackle poverty and meet the Millennium Development Goals are in tatters as the economy struggles to deal with the costs of devastating seasonal floods, the 'war on terror', and the huge burden of foreign debt.

"The legitimacy of the debt needs to be challenged if widespread economical turmoil and instability are to be avoided."

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