ISLAMABAD: Former governor State Bank of Pakistan (SBP) Reza Baqir has stressed the need for concrete measures to see how the pledges of donors are translating into actual inflows for developing countries.
"More need to be done for low-income countries including Pakistan", Baqir added.
While talking to CNBC on the occasion of Summit for a New Global Financial Pact in Paris on Thursday, he said that “there will be pledges, but if history is any guide, the world will not have an adequate mechanism to monitor how those pledges convert to actual inflows for developing countries".
He stated that last year, Pakistan faced massive floods due to climate change.
According to the estimates, there has been a damage of around US$30 billion to the economy. The United Nations then held the summit for Pakistan in Geneva in January of this year, in which, several billion dollars were pledged but of that amount a few hundred million at most have trickled in for Pakistan to deal with the calamity of floods caused by global climate change.
As those who have the ability to assist head to the Paris conference my question to them is where is the money?
"I ask donor countries headed to Paris for the New Global Financing Pact: Where is the money? Billions of dollars were pledged to Pakistan after last year's floods but only millions have trickled in".
He said that there is no adequate mechanism to monitor how those pledges convert to actual inflows for developing countries. According to the IMF in 1981, on average, a low-income country got about eight per cent of its GDP in inflows from official countries and other lenders. In 2021, the same figure was two per cent of GDP.
At the same time, the debt of these countries has more than doubled. In 2010, on average, according to the IMF, the debt of low- and middle-income countries was around 35 per cent of GDP. In 2020, just in 10 years it was around 65 of GDP and the IMF projects that it is going to rise further to 75 per cent of GDP over the next 10 years.
So my question is when over the several decades the amount of financial assistance has gone down the debt of these countries has gone up when you look at the future we need concrete measures to see how pledges are translating into actual inflows for the developing countries, he added.
Copyright Business Recorder, 2023