Write-offs, rescheduling of loans: Senate asks world to rescue Pakistan’s economy

4 November 2010


ISLAMABAD, Nov 2: The Senate on Tuesday unanimously called upon the international community to consider urgent measures for revival of Pakistans economy. Among the initiatives proposed were write-offs and rescheduling of Pakistans debt, market access for the country’s products and investment in rehabilitation and reconstruction projects in flood-stricken areas.

A resolution, moved by Leader of the House, Syed Nayyar Hussain Bokhari, after both opposition and treasury agreed on its draft said: “This House commends the resolution adopted unanimously by the 123rd Inter-Parliamentary Union in its meeting held in Geneva on Oct 6, which inter alia urged the international community, in particular donor countries, IFIs including IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
, World bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

and ADB to take swift measures such as writing off and/or rescheduling Pakistan’s debt, providing market access to revive Pakistan’s economy and investing in rehabilitation and reconstruction projects for the flood-stricken areas of Pakistan.

“The House resolves that all efforts be made to secure implementation of the aforesaid resolution of the IPU aimed at mitigating sufferings of the flood affectees. The Chairman Senate is authorised to take all necessary steps to achieve the objectives of the resolution.”

Speaking on the state of economy, the parliamentary leader of PML-N, Ishaq Dar, regretted that the current GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
-to-tax ratio of 10 per cent was dismal.

Dr Safdar Abbasi, of the People’s Party, said debts were growing at a fast pace while the economy was not picking up. Finance managers ought to be questioned as to where were they taking the country, the PPP leader added.

Mian Raza Rabbani, adviser to the prime minister, said a special committee be set up to study the matter of debt rescheduling Debt rescheduling Modification of the terms of a debt, for example by modifying the due-dates or by postponing repayments of the principal and/or the interest. The aim is usually to give a little breathing space to a country in difficulty by extending the period of repayment and reducing the amount of each instalment or by granting a period of grace during which no repayments will be made. before taking it up with world bodies.

Published by The Dawn Media Group




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