Factually speaking, the suggestion, or call it a piece of advice, came from the UN general secretary that, in the wake of severe flooding, Pakistan should be granted debt relief from bilateral creditors. Later, Finance Minister Miftah Ismail, also pleaded the case, that his government would not be looking for assistance from commercial banks or Eurobond creditors. The news of possible defaulting on credit payments, however, impacted Pakistan’s sovereign bonds’ value, which fell to just half their face value after the Financial Times reported that a UN development agency was pleading with the cash-strapped nation to restructure its debt. Pakistan must be granted a debt restricting schedule as it looks swimmingly unlikely that the coalition government will achieve the economic goals it has set for the current fiscal year. The finance minister had never predicted when he presented the finance bill back in June that within months, a third of the country, particularly Sindh and Balochistan, will be underwater, and over 33 million people displaced. Floods have left everything damaged that came their way: homes, roads, rail tracks, bridges, crops, livestock, and livelihoods.
Several international aid agencies and governments have promised aid for Pakistan, but the promises have yet to be realized. Moreover, the country has yet to receive the desperately-needed $160 million for rescue and relief of the flood-hit people. Under these circumstances, the government has revised its economic growth target from five percent to two percent. The World Bank predicts that growth may remain restricted to half percent. Even before the flood, the country’s economy was already in a tailspin as the government struggled with one of Pakistan’s worst balance-of-payments crises, piling debt and soaring inflation. Pakistan deserves a kind hearing from the world community, which Foreign Minister Bilawal Bhutto-Zardari calls ‘climate justice’. The world must show its responsibility to climate change-related disasters and help Pakistan in overcoming its flood-related economic losses, which are expected to be close to $30 billion.
