Islamabad Chamber of Commerce & Industry has demanded of the international financial institutions to seriously consider writing off Pakistan’s loans in view of the massive devastation caused to its economy by the recent unprecedented floods.

Presiding over a meeting of businessmen, Mr. Zahid Maqbool, President ICCI said that Pakistan will not be able to pay off huge debts, especially in the wake of biggest natural calamity of its history that has not only uprooted over 20 million people, but incurred monetary losses to the tune of billions of dollars.

He said this is the time that international lenders should realize the precarious situation of Pakistan and mull over writing off its loans giving the government some breathing space to accelerate the pace of rehabilitation and reconstruction activities.

He said Pakistan has paid a staggering amount of $5.6 billion as debt servicing (principal plus interest) during the fiscal 2010, which was 43 per cent of the official foreign exchange reserves of the country and which has been borne by the working masses in the form of subsidy cuts, regressive indirect taxes, and a general shift towards jobless growth.

Businessmen said that Pakistan’s debt servicing cost is expected to increase by Rs.34 billion in the current fiscal year 2010-11 due to 0.5 percentage points hike in the discount rate announced by the State Bank of Pakistan in its last monetary policy statement.

They said that already for every $1 Pakistan spent on health, it spent $3 on debt servicing. However, the catastrophic floods have further compounded Pakistan’s debt servicing ability.

They called upon the world community to play its due role for rehabilitation of flood affectees and urged world financial institutions including IMF, World Bank and Asian Development Bank to write off debt of Pakistan. They also stressed upon the government to approach these donors with a request for writing off loans in view of the post-flood situation.

ICCI President said that with limited financial resources, government is facing an uphill task of providing immediate relief and rehabilitation to flood affectees. He said government should clearly convey to the world that rebuilding of flood-hit areas and recovery of losses caused by destruction of crops would take months if not years. Thus,  international lenders should help it by writing off its loans.