Pakistani Prime Minister Imran Khan appealed to the international community Sunday to provide developing countries with an urgent debt relief to help tackle the COVID-19 crisis facing them.
Khan made his “global initiative on debt relief” appeal on a day when a Wold Bank report warned countries in South Asia, including Pakistan, India, Afghanistan and Bangladesh, are on course to experience their worst economic performance in 40 years in the wake of the coronavirus outbreak.
In his nationally televised speech, Prime Minister Khan said the developed world is focused on containing the deadly pandemic through lockdowns and dealing with its economic impacts at the same time.
But he lamented struggling economies like that of Pakistan have been hit hard by restrictions on movement that have halted economic activity, caused widespread unemployment and triggered new challenges.
While stopping the virus from killing people, the “biggest worry” for the developing world now is that people are dying of hunger as a result of the lockdown , Khan lamented.
“The problem they face now is a lack of fiscal space. We don’t have the money to spend on already the overstretched health services and to stop people from dying of hunger.”
Khan insisted that rich countries have come up with trillions of dollars of relief packages for their people to offset immediate economic fallout, but that luxury is not available to his and other developing nations to manage the unfolding challenges.
“To give an example of Pakistan, with a population of 220 million, so far the maximum stimulus (relief package) we could afford is $8 billion, and this is the issue with most of the developing world,” he said.
Khan’s government rolled the largest social protection program in Pakistan’s history last week to pay nearly $1 billon to more than 12 million poverty-stricken families, or an estimated 80 million individuals, to help alleviate the economic fallout of the outbreak.
“Therefore, I will be appealing to the world leaders, to the heads of financial institutions, to the Secretary General of (the) United Nations to launch an initiative that will give debt relief to developing countries to combat the coronavirus.”
Pakistan, where an estimated 40% of people live in poverty, owes more than $100 billion debt to international lenders and a large chunk of the national budget is consumed by debt servicing.
World Bank Report
The world’s most populous region of South Asia which houses 1.8 billion people, “finds itself in a perfect storm” in the wake of the pandemic outbreak, according to the World Bank report.
It forecasted the regional growth is likely to drop to between 1.8% and 2.8% in 2020 from the pre-pandemic projection of 6.3%.
“Tourism has dried up, supply chains have been disrupted, demand for garments has collapsed and consumer and investor sentiments have deteriorated, international capital is being withdrawn and inflows of remittances are being disrupted,” the report warned.
Unlike other nations worst-hit by COVID-19, South Asian countries have so far reported fewer than 15,000 cases of infections, with India, the largest country in the region accounting for more than 8,000. Pakistan recorded 5,200 infections, with at least 88 deaths, as of Sunday.
But experts fear the region, with some of the world’s most densely populated cities, could become the next coronavirus hotspot.