The UN recipe for rebuilding Pakistan: Massive support and debt relief

Yesterday, the UN Secretary-General called for massive support to raise the more than $8 billion Pakistan needs to rebuild after last year’s devastating floods, which could seal the fate that awaits a large number of countries facing to climate change. “No country deserves to suffer what happened to Pakistan,” said Antonio Guterres, at the opening of an international conference to mobilize half of the 16.3 billion dollars deemed necessary to rebuild the country so that, in particular, it is more resilient to the consequences of climate change. The UN secretary general has called for “massive investment” and a reform of the international financial system to help Pakistan, an issue he had already raised at COP27 on the climate in Egypt.

Present yesterday, the World Bank called for “to contain expenditure within bearable limits”. “A truly resilient recovery will not be possible without further fiscal and structural reforms,” ​​warned Martin Raiser, vice president for South Asia at the WB, calling for better targeting of social assistance, cutting spending that “weakens public finances” and adopting “more progressive and broader taxation”. The devastating floods – which killed more than 1,700 people and affected more than 33 million people – and the global energy crisis have increased the pressure on the Pakistani economy, plunging the country into an extremely difficult financial situation.

Pakistani Prime Minister Shehbaz Sharif told the conference that his country was in a “race against time” to meet immense needs. “We are at a turning point in history,” he warned. In front of reporters, he urged the International Monetary Fund to reduce the pressure. “I’m constantly trying to get them to give us a break,” he said. “Economic stability is very important. The day we are all dead, economic stability will be perfect », joked the head of the United Nations next to him, in support.

“Creative” international financing.

Pakistan, the world’s fifth most populous country with 216 million people, is responsible for less than one percent of greenhouse gas emissions. But it is one of the most vulnerable to the growing number of extreme weather events. The country is also among those who supported the creation of the “loss and damage” fund at COP27 aimed at supporting the countries of the South in the face of the consequences of global warming. “In case of doubts about losses and damages, go to Pakistan”, Guterres said yesterday, assuring that the country is “a doubly victim of climate chaos and a morally bankrupt global financial system”. He complained that the international financial system does not provide sufficient support to middle-income countries that need to “invest in natural disaster resilience”, by providing debt relief or new finance, and called for “creative” international finance to help these countries “. when they need it most”.

Of the $16.3 billion needed to fund Pakistan’s “Resilient Recovery, Rehabilitation and Reconstruction Plan”, the government estimates it can fund half through its own budget and public-private partnerships, but needs the international community to pay the rest. Islamabad and the UN explained that yesterday’s conference, which was attended by representatives of about 40 countries, the WB and development banks, intends to be much broader than a traditional donor conference, as it seeks to establish an international partnership long-term focused on reconstruction, but also aimed at improving Pakistan’s climate resilience. The Islamic Development Bank group has pledged to finance $4.2 billion over the next 3 years. And some countries made announcements yesterday, including the United States with another $100 million and France with €360 million in projects to help reconstruction and another €10 million in emergency aid.

Nina LARSON and Agnès PEDRERO/AFP