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

UN Development Program prepares memorandum to be shared with Pakistan's government.

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

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, as 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.

"It is not striking back on those who have contributed more to the war on nature. 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.

So far 1,596 people have lost their lives while 12,758 people have been injured in the 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 the authority.

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, inundating vast swaths of plains, and farms.

Destructive rains and floods have also washed away 13,074 kilometers (8,123 miles) of roads, 392 bridges and buildings across the South Asian nuclear country, which is already grappling with political and economic turmoil.

Over 33 million of the country's approximately 220 million population have been affected by the raging floods, causing a staggering loss of over $30 billion in damages to an already weakened infrastructure.

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, with health experts warning of a higher number of deaths from diarrhea, gastrointestinal, typhoid, malaria dengue, and other infections than from rains and floods.