'All Hell Will Break Loose' Unless West, China Provide Pakistan With 'Urgent Debt Relief,' PM Says

Prime Minister Shehbaz Sharif’s appeal for an “urgent debt relief” comes days after the country’s finance minister assured that Islamabad won’t default on its foreign debt obligations, as it awaits billions in dollars in aid commitments from its foreign donors.

Pakistan Prime Minister Shehbaz Sharif has said that “all hell will break loose” if the flood-battered South Asian country isn’t provided with “urgent debt relief” from its foreign debt repayments by the rich nations as well as China.

An official statement on Friday said that Sharif has also requested a “special programme for rehabilitation” of flood-affected people from international donors.

The appeal for a “debt moratorium” was first made during an interview with Bloomberg TV in the US. The Pakistani Prime Minister is due to address the UN General Assembly on Friday and expected to reiterate his call for debt relief.

“We will most definitely request our Chinese friends… And, we have spoke to IMF. We have spoke to the World Bank… to arrange programmes for immediate relief to these millions of people,” Sharif said in the interview.

Sharif also pointed out that the International Monetary Fund (IMF) had imposed “tough conditionalities” on Islamabad while agreeing to disburse a $1.1 billion under an Extended Financing Facility (EFF) in view of depleting forex reserves and multi-decade high inflation caused by spike in food and fuel prices globally.

“(Under the IMF terms), Every month we have to tax petroleum, tax electricity and yet rehabilitate millions of people who are shelter-less, who have to (re)build their houses… We have to send them back to work to agriculture, industry and start producing” remarked the Pakistani leader.

According to the country’s finance minister, Pakistan’s overall foreign debt is close to $81 billion and primarily owed to lenders such as Saudi Arabia, the UAE and China. Around $30 billion is owed to Beijing, the finance minister has also stated. Further, Islamabad owes billions in dollars to the European Union and multilateral institutions based in the US.

The Pakistani authorities have said that the floods, which have been blamed on climate change, have affected over 3.3 million people and left close to 1,600 people dead. The flooding has also inundated large swathes of agricultural lands, affecting the country’s food security.

Islamabad as well as the United Nations Secretary General Antonio Guterres, who visited the country’s flood-ravaged regions this month, have estimated that heavy rainfall have caused a potential damage of more than $30 billion.

Earlier on Friday, the UN Development Programme also reportedly suggested in an internal memo that the country’s creditors should grant a relief from interest payments owing to the worsening economic indications because of the floods.