Pakistan floods: UN proposes suspension of debt repayments, restructuring loans

ISLAMABAD (AA) – In the aftermath of the most devastating floods Pakistan has ever seen, the United Nations has proposed suspending all of its international debt repayments and restructuring loans with creditors.

The UN Development Program (UNDP) has prepared a memorandum that it plans to share with the government, proposing a suspension of all international debt repayments and restructured loans with creditors, according to the Financial Times.

The country is already in an economic crisis even after the International Monetary Fund (IMF) released a long-stalled $1.17 billion tranche of its bailout package for the cash-strapped country earlier this month.

In July, the Ministry of Economic Affairs stated in a written response to parliament that Pakistan’s total external debt and liabilities exceeded $126 billion.

The continuous floods have caused the country to be concerned about paying its instalments.

Earlier this week, UN Secretary General Antonio Guterres urged world leaders to take decisive steps to address climate change.

During his recent visit to flood-affected areas in Pakistan, the UN chief urged world leaders to consider debt reduction for countries facing climate and economic challenges.

“Pakistan has given little contribution to climate change, yet it is one of the most severely impacted hotspots by the consequences of climate change,” he said.

There have been 1,596 deaths and 12,758 people have been injured in rain and flood-related incidents across the country since mid-June.

Property damage is also increasing, with over 2 million houses damaged, including 804,998 completely destroyed and over one million livestock killed, according to official data.

Monsoon season in Pakistan, like in other countries in the region, usually results in heavy rains, but this year has been the wettest since 1961.

Currently, one-third of the country is underwater as the massive rains and melting glaciers have caused the country’s main Indus River to overflow.

Floods have also washed away 13,074 kilometers (8,123 miles) of roads and 392 bridges across the South Asian country.

Over 33 million of the country’s approximately 220 million population have been affected by the floods, causing a staggering loss of over $30 billion.

Almost 45% of the country’s cropland has already been inundated by the floods, posing a serious threat to food security and further adding to the already skyrocketing inflation.

Hundreds of thousands of displaced people are also dealing with outbreaks of waterborne skin and eye diseases.