EDITORIAL: Prime Minister Shehbaz Sharif’s impassioned advocacy in his address to the United Nations General Assembly as well as in his contacts with several heads of government on the sidelines has undoubtedly increased the country’s influence with donors, both bilateral than multilateral. His poignant showing of life in Pakistan after the floods left many foreign government leaders sympathizing with the Pakistani delegation and vowing to help him.
Sharif managed to blend the impacts of climate change in the summer of 2022 all over the world, including Europe, the United States, China and of course the most affected Pakistan, as he said, “ for 40 days and 40 nights biblical floods poured down on us.
Even today, whole sections of the country are still under water. 33 million people, including women and children, are at high risk of health problems…the undeniable truth is that the calamity was not triggered by anything we did….
It’s time to ask why… it’s time to ask what to do. Our forests are burning. More heat waves are coming. We had a monstrous monsoon. It was the monsoon on steroids as the UN Secretary General described it. Pakistan emits less than one percent greenhouse gases.
US Secretary of State Anthony Blinken contacted Foreign Minister Bilawal Bhutto-Zardari in May this year before the floods began to invite him to a meeting on food security at UN headquarters in New York on May 18, 2022.
During his recent visit, Prime Minister Shehbaz Sharif also met with President Biden who, in his address to the UNGA, spoke about the devastation caused by the floods in Pakistan. To date, the United States has become the largest bilateral donor to flood victims.
Importantly, the reserves of the State Bank of Pakistan (SBP) remain appallingly low at $8.69 billion as of September 9 this year, after the International Monetary Fund (IMF) disbursement of $1.16 billion, and deposits with commercial banks estimated at $5.59 billion, down from $5.97 billion on June 10, 2022, raising questions about the inflows claimed for flood relief through multilaterals/bilaterals and/or through the telethon.
The World Bank pledged $2 billion for flood relief and rehabilitation, money diverted from aid already pledged, and the Asian Development Bank announced $3 million in aid, which is a proverbial drop in the ocean, given the extent of the damage.
However, the IMF has been ominously silent and while some of that silence can be blamed on our economics team for their negligence in failing to mention the floods in the Letter of Intent dated August 16; yet one would assume that the Fund’s mission was fully aware of the damage caused by the international media reports and inexplicably failed to make appropriate adjustments to the extremely tight monetary and fiscal policy conditions as outlined in the policy memorandum economic and financial uploaded to its website this month.
In other words, with the world fully aware of the flood damage of biblical proportions, as stated by Prime Minister Sharif, there is little doubt that Pakistan’s influence has increased somewhat with the Fund; however, channeling this leverage effectively to meet the needs of flood victims rather than to score political points may require persuasive U.S. intervention as well as a knowledgeable and dedicated effort on the part of team leaders. newly appointed trading posts including Ishaq Dar as Minister of Finance (to be officially appointed today or tomorrow) and Jameel Ahmed Governor State Bank of Pakistan (appointed August 26, 2022).
At present, the postponement of debt repayment (interest and repayment at maturity) has been requested and has not yet been approved by the bilaterals.
However, it is suggested that given the extent of the flood damage, the economics team might consider a request to be treated as a Heavily Indebted Poor Country (HIPC) for a year or two, defined as a country without adequate finance which governments owe a great deal to bilaterals. and international banks – an initiative launched in 1996 by the IMF and World Bank with the aim of ensuring that no poor country faces a debt burden it cannot manage.
In 2005, to accelerate progress towards the achievement of the Sustainable Development Goals, the HIPC Initiative was complemented by a Multilateral Debt Relief Initiative which provides 100% relief of eligible debts by three multilateral institutions, including the IMF, World Bank and African Development Bank (of which Pakistan is not a member). Once the victims have been rehabilitated, the HIPC status can be immediately withdrawn.
Copyright Business Recorder, 2022