According to a UN policy memo seen by the Financial Times on Friday, Pakistan should halt foreign debt repayments and restructure debts with creditors after recent floods worsened the nation’s financial predicament.
According to the publication, the document urges the country’s creditors to explore debt relief so that decision-makers can give funding for its disaster response precedence over loan repayment. The UN Development Program will share the message with the government this week.
The government of Pakistan has already put the cost of the damage at $30 billion, and UN Secretary General Antonio Guterres has attributed the flooding to climate change.
Guterres repeated the appeal he first made during his visit where he urged lenders to consider debt reduction to help those nations that were facing a possible economic collapse.
At the UNGA, he reiterated, “Creditors should take into account debt reduction tools such debt-climate adaption swaps.” These may have helped Pakistan, which is drowning in debt as well as floodwater, preserve lives and livelihoods.