Global lenders would spend billions on war but only offer loans to flood-ravaged Pakistan: PM Shehbaz at Paris summit

Published June 22, 2023
Prime Minister Shehbaz Sharif speaks at the New Global Financing Pact Summit in Paris on Thursday. — Screengrab via  Reuters YouTube
Prime Minister Shehbaz Sharif speaks at the New Global Financing Pact Summit in Paris on Thursday. — Screengrab via Reuters YouTube
Prime Minister Shehbaz Sharif (R) meets French President Emmanuel Macron on the sidelines of the New Global Financing Pact Summit in Paris, France on Thursday. — Photo courtesy Radio Pakistan
Prime Minister Shehbaz Sharif (R) meets French President Emmanuel Macron on the sidelines of the New Global Financing Pact Summit in Paris, France on Thursday. — Photo courtesy Radio Pakistan
Prime Minister Shehbaz Sharif meets IMF Managing Director Kristalina Georgieva on the sidelines of a summit in Paris on Thursday. — PMO
Prime Minister Shehbaz Sharif meets IMF Managing Director Kristalina Georgieva on the sidelines of a summit in Paris on Thursday. — PMO

Prime Minister Shehbaz Sharif decried on Thursday the response of international institutions to Pakistan’s appeals for funds following catastrophic floods in 2022, saying that it was offered loans whereas billions were being spent on the defence of “a country or countries”.

The premier made these remarks at the two-day New Global Financing Pact Summit in Paris where he stressed the need for a fair and equitable formula for the distribution of financial resources in the world.

He is among several global leaders gathered in Paris for the summit to tease out a new consensus on international economic reforms to help debt-burdened developing countries face a growing onslaught of challenges, particularly climate change.

PM Shehbaz began his speech by recalling the devastation caused by floods in Pakistan last year, “as a result of climate change”.

The PM said 33 million people were affected by those floods and millions of acres of standing crops was washed away while around 1,700 people had died. Moreover, he added that half a million animals drowned in the floods and two million house were either completely demolished or partially damaged.

To help those affected by the floods, he said, “we had to cough out hundreds of millions of dollars from our own pocket with our scarce resources … Of course, we are very grateful to our friendly countries across the globe for their valuable and timely contribution, but largely, the cash amount had to be generated from our own resources.

“And when we approached international institutions, they said, ‘Well, we can give you loans.’”

The premier said when these institution were asked whether the already stretched resources of Pakistan be burdened further, their reply was debt-structuring would not be good for the country.

“We know that there are tensions around the globe, and billions and billions of dollars are being spent over there, to defend this [country],” he said in apparent reference to Ukraine.

“On one hand, you are ready to provide everything for the defence of a country or countries — that is perfectly okay — but when it comes to the question of saving thousands and thousands of people from dying, then [one has] to borrow money at a very high cost. Then you have to … beg and borrow and further deteriorate your already very precarious financial situation,” he decried.

The premier emphasised the need for a “fair, equitable and judicious” formula for the distribution of financial resources. Otherwise, he said, “this world will never live in peace”.

“Unless we come forward in generous terms to provide an opportunity, and a system, and a mechanism which will satisfy the most vulnerable at bare minimum, and which will create harmony in terms of economic justice and fairness, this world shall always be in trouble.

“It’s never too late. Let’s stand up and say no to injustice,” he concluded.

Call for ‘finance shock’

Earlier, French President Emmanuel Macron told the delegates in his opening remarks the world needs a “public finance shock” — a global surge of financing — to fight these challenges, adding the current system was not well suited to address global challenges.

Macron, who is hosting the two-day conference, invited Barbadian Prime Minister Mia Mottley to co-headline the event which seeks to improve the lending system for developing countries mired in poverty and threatened by planet-heating emissions.

“Policymakers and countries shouldn’t ever have to choose between reducing poverty and protecting the planet,” Macron told the Summit for a New Global Financial Pact.

Ugandan climate campaigner Vanessa Nakate took the podium after Macron and asked the audience to take a minute of silence for people who are suffering from disasters.

With oil-rich Saudi Arabia’s Crown Prince Mohammed bin Salman in the crowd, she slammed the fossil fuel industry, saying they promise development for poor communities but the energy goes elsewhere and the profits “lie in the pockets of those who are already extremely rich”.

“It seems there is plenty of money, so please do not tell us that we have to accept toxic air and barren fields and poisoned water so that we can have development,” she said.

Mottley, whose Caribbean island nation is threatened by rising sea levels and tropical storms, has become a powerful advocate for reimagining the role of the World Bank and International Monetary Fund (IMF) in an era of climate crisis.

“What is required of us now is absolute transformation and not reform of our institutions,” Mottley said.

Barbados has put forward a detailed plan for how to fix the global financial system to help developing countries invest in clean energy and boost resilience to climate impacts.

“We come to Paris to identify the common humanity that we share and the absolute moral imperative to save our planet and to make it livable,” said Mottley.

Outlining the challenges facing developing countries, United Nations Secretary General Antonio Guterres said more than 50 nations were now in or near debt default, while many African countries are spending more on debt repayments than on healthcare.

Guterres said the post-World War II global financial system was failing to rise to modern challenges and now “perpetuates and even worsens inequalities”.

“We can take steps right now and take a giant leap towards global justice,” he said, adding that he has proposed stimulus of $500 billion a year for investments in sustainable development and climate action.

In a nod to those looking for tangible progress from the summit, IMF director Kristalina Georgieva announced that a key pledge to rechannel $100bn of liquidity boosting “special drawing rights” into a climate and poverty fund had been met.

“Ultimately it is the future of humanity that is being discussed here,” she told reporters.

Macron also said he was hopeful that a 2009 pledge to deliver $100bn a year in climate finance to poorer nations by 2020 would finally be fulfilled this year — although actual confirmation the money has been delivered will take months if not years.

PM Shehbaz meets world leaders

Prior to the summit, PM Shehbaz met world leaders, as well as heads of the UN and International Monetary Fund (IMF), and highlighted the challenges faced by developing nations, particularly as a consequence of climate change.

According to state broadcaster Radio Pakistan, PM Shehbaz met Macron on the summit’s sidelines today and underlined that developing nations were facing “problems of non-availability of resources, burden of interest for debt payments and slow development”.

And the devastating effects of climate change had added to the hardships of these already troubled countries, the report quoted him as saying.

It added that the premier appreciated Macron for his “bold step” towards a system that was based on financial justice for developing countries.

Helping indebted developing countries under a New Global Financing Pact was the need of the hour so that their citizens could get relief, he said, adding that the French president had made a significant effort to create global consensus on an important issue.

The premier also thanked the French president for inviting him to the moot and “his warm hospitality”.

For his part, Macron thanked PM Shehbaz for attending the summit, and the the two leaders agreed to remain engaged on issues of mutual interest, the Radio Pakistan report said.

The premier also met United Nations (UN) Secretary General Antonio Guterres.

During his exchange with the UN chief, the premier reiterated that climate change had exacerbated the financial burden on developing countries, which he said were facing new challenges in increasing economic growth and maintaining fiscal balance.

He stressed the utilisation of the Loss and Damage Fund established during COP27 to provide financial assistance to developing nations.

The premier termed the summit in Paris for a new global financial agreement “ a good start in the right direction“ and emphasised the need for fair distribution of global financial resources along with climate justice for developing countries.

Later, he said he discussed with the UN chief the current status of rehabilitation of Pakistan’s flood victims.

“I thanked the secretary general for his consistent and powerful advocacy of climate change and his call for helping the developing countries to cope with the challenge.

“We agreed that the international community needs to deliver on its pledges for climate justice,” he tweeted.

According to the Prime Minister’s Office (PMO), the premier also met Saudi Crown Prince Mohammad Bin Salman and both leaders agreed to expedite the collaborative process in order to further bolster the bilateral cooperation.

The statement said the two leaders also exchanged views on matters of bilateral interest and PM Shehbaz extended best wishes for Saudi King Salman bin Abdulaziz. In return, the crown prince expressed goodwill for the government and people of Pakistan, the statement added.

Later, the PM met US climate envoy John Kerry and the two leader extended good wishes to each other, according to an update on the PML-N’s Twitter.

The statement said the premier said climate change was a common problem of countries across the world and stressed that joint strategies and efforts were needed to address this issue.

Kerry being the first US Special Presidential Envoy for Climate was a recognition of the importance of the issue, he said, highlighting that increasing problems of climate change were having an adverse effect on economic growth and development, particularly in developing nations.

“Developing nations, in particular, should play a role in helping developing countries deal with the negative effect of climate change on economic growth,” he emphasised.

He said after establishment of the Loss and Damage Fund at COP 27, promises of the provision of resources would have to be realised.

The premier also mentioned that the catastrophic floods of 2022 had added to Pakistan’s problems.

He termed the Paris Summit a “message of hope” for developing countries, highlighting the need for reform in the global financial structure to ensure the availability of resources to developing nations.

Kerry agreed with the premier on climate change increasing “risks” for developing countries, the PML-N statement said.

It added that both leaders agreed to proceed on the matter with consultation.

According to the PMO, PM Shehbaz also met Egyptian President Abdel Fattah al-Sisi.

The premier is also scheduled join the world leaders at a dinner reception hosted by the French president for the participating dignitaries of the Paris summit and hold bilateral meetings with different heads of state during the trip.

He arrived in Paris a day earlier where he was received by Pakistan’s ambassador in France and diplomatic officials, besides senior French government authorities.

Prior to his departure, he tweeted that he during the visit, he “will present Pakistan’s position on the need for restructuring of international financial institutions to fight the contemporary challenges facing humanity”.

“As a leading stakeholder in G-77 plus China grouping and also as a country adversely hit by climate change threat, Pakistan is better positioned for this role,” he said.

The reform of international financial architecture, he said, had long been a key demand relentlessly made at different forums by public policy scholars, policy practitioners and world leaders, especially from the Global South. He said the grave nature of challenges, such as climate change, natural disasters, environment, rising levels of debt and energy transitions, had rung alarm bells.

Meeting with IMF chief

Earlier today, PM Shehbaz met IMF Managing Director Georgieva and apprised her of steps taken to address Pakistan’s flailing economy, expressing hope that the funds allocated under the lender’s Extended Fund Facility (EFF) would be released as soon as possible.

The premier’s meeting with Georgieva comes as Pakistan’s ninth review by the IMF under the 2019 EFF for the release of $1.2bn stays pending with less than 10 days remaining till the programme’s expiry on June 30.

The country was expected to get around $1.2bn from the lender in October last year as part of the EFF’s ninth review. But almost eight months later, that tranche has not materialised as the IMF says Pakistan has been unable to meet important prerequisites.

Because of this delay, the programme’s tenth review, which was originally part of the plan, is all but out of question.

According to a statement issued by the Prime Minister’s Office today, PM Shehbaz outlined the steps taken by the government for economic growth and stability in his meeting with the IMF managing director.

“He underscored that all prior actions for the ninth review under the EFF had been completed and the government of Pakistan was fully committed to fulfilling its obligations as agreed with the IMF,” it said.

The prime minister, the statement said, expressed the hope that the funds allocated under the IMF’s EFF would be released as soon as possible. “This would help strengthen Pakistan’s ongoing efforts towards economic stabilisation and bring relief to its people.”

Meanwhile, IMF’s Georgieva shared her institution’s perspective on the ongoing review process. The PMO added that the meeting provided a useful opportunity to take stock of the progress in that context.

The meeting was also attended by Climate Change Minister Sherry Rehman, Economic Affairs Minister Sardar Ayaz Sadiq, Information and Broadcasting Minister Marriyum Aurangzeb, Minister of State for Finance and Revenue Aisha Ghaus Pasha, Special Assistant to PM Tariq Fatemi and Pakistan’s Ambassador to France Asim Iftikhar Ahmad.

Later, PM Shehbaz said he and the IMF chief had a “productive exchange of views” on the IMF’s continued engagement with Pakistan.

“The government is fully committed to the ongoing Extended Fund Facility (EFF). Though all prior actions for the ninth Review have been completed, we are willing to take further steps jointly with IMF. Pakistan keenly looks forward to IMF Board’s approval for the ninth Review at the earliest,” he tweeted in response to a tweet by Georgieva.

Opinion

Editorial

Unyielding onslaught
12 Jun, 2024

Unyielding onslaught

SEVEN soldiers paid the ultimate price in Lakki Marwat on Sunday when their vehicle was blown up in an IED attack,...
X diplomacy
Updated 12 Jun, 2024

X diplomacy

Both states can pursue adversarial policies, or come to the negotiating table and frankly discuss all outstanding issues, which can be tackled through dialogue.
Strange decisions
12 Jun, 2024

Strange decisions

THE ECP continues to wade deeper and deeper into controversy. Through its most recent decision, it had granted major...
Interest rate cut
Updated 11 Jun, 2024

Interest rate cut

The decision underscores SBP’s confidence that economic stability is gaining traction.
Rampant zealotry
11 Jun, 2024

Rampant zealotry

Decades of myopic policies pursued by the state have further aided the radicalisation of significant portions of the population.
Cricket breakdown
11 Jun, 2024

Cricket breakdown

THERE was a feeling that Pakistan had finally turned the corner in their T20 World Cup campaign. Sadly, it was only ...