Apart from harsh conditionalities, IMF also imposes surcharges on the loans received by Pakistan. These surcharges and unnecessary and harmful and should immediately be withdrawn. Pakistan already paid an estimated US$65 million in surcharges from  2018 to 2020. That means over 11 billion Rupees. Pakistan is projected  to pay $392 million more from 2021-2030.  

Surcharges are  fees that  the IMF charges member-countries for  late payments and loans that exceed their quotas. There are two types of surcharges:  quota-based are applied when the size of the country’s loan exceeds 187.5 percent of its IMF quota; and, time-based which are applied to loans outstanding after 35 to 51 months, depending on the credit facility.

Member-states (especially middle income)  borrow from IMF when experiencing crises to assist in their balance of payments problems, financial crises, or unmanageable fiscal deficits and excessive debts. Ironically, however, IMF “assistance” means that countries facing greater crises, are also the ones facing the greatest risk of eventually defaulting and/or borrowing more.

Pakistan is one of the biggest borrower-countries of IMF. In 2020, Pakistan’s total public debt already stood at 87% of GDP. In dollar terms, Pakistan paid external debt service amounting to US$14.6 Billion in 2020.

Surcharges are paid in addition to interest payments and principal amortizations, thus adding to the country’s debt burden. This, despite the fact that Pakistan's present PTI government has fulfilled almost all harsh conditionalities of IMF, resulting in historic price hikes and deepening poverty.  

To receive the last trench of the IMF $6 billion loan approved in 2019, Pakistan met several conditions in the mini budget passed on 23 January 2022 as well as in a bill to hand over the administrative and political powers of the State Bank of Pakistan to IMF, ostensibly to “grant [it] more autonomy”.

The agriculture sector is about to be the first victim of this economic decision. Farmers have been holding protests against the government for the shortage of essential crop inputs, expensive agriculture equipment and tools, and higher taxes. 

Withdrawing subsidies including for food, electricity, fertilisers and fuel has resulted in greater costs  for farmers. Electricity subsidies for tube-wells have  been totally withdrawn and thus watering crops has become even more expensive. The average expenditure contraction in 2021 was projected at 3.3% of GDP. 

Social Protection has been shifted for the rich. The wealthy, including the agriculture business companies, have been bailed out by state subsidies. 

Meanwhile, due  to so-called rationalisation and narrow targeting, the poorest section of the population receives much smaller social protection benefits, while most people are excluded. Out of 80 million, only 1.5 million people have been able to benefit.

Imposition of IMF austerity conditionalities and levying surcharges have also contributed to the dire state of public services such as the health sector which has been downsized or privatised. The introduction of health cards is the latest and the biggest scam that only favours private hospital mafia. Public money is handed over to private health companies in  the name of providing health facilities for the poor.  

As many as 10 million Pakistanis have already been pulled into absolute poverty. Up to 46% of the population (over 80 million) was already below the poverty line before the pandemic. This is  estimated to increase by 5-6% due to the multiple crises intensified by Covid-19. 

Pakistan’s massive and increasing debt burden means that it is compelled to meet debt service requirements at great human and social cost. For now, gone are the concerns about how to “pay for” it all. Instead, we are seeing wartime levels of spending that do not redound to people’s benefit, which have increased  deficits and the public debt  to new highs. Working classes have been forced to bear the effect of this mounting debt burden through more indirect taxation, as a result.

It is unconscionable that the IMF has collected over $4 billion in surcharges since the start of the COVID-19 pandemic and made surcharges the IMF's largest source of revenue for that period. 

We call on the IMF’s Executive Board to carry out an immediate review of the surcharge policy, ensure transparency around past and future surcharge payments, and challenge it to align the institution with its mandate by eliminating surcharges. 

We call on the Pakistan government for a Debt and surcharges retirement of at least four years and spend the saved amount on public services, including massive grants for farmers and peasants in the prices of oil, electricity and gas. 

 

Farooq Tariq, Saima Zia

Pakistan Kissan Rabita Committee

Asian Peoples’ Movement on Debt and Development (APMDD) 

Khalid Shah

Committee for the Abolition of Illegitimate Debt (CADTM) 

 

PRESS RELEASE | February 9, 2022

---

Southeast Asian civil society organizations and movements yesterday called on the Association of Southeast Asian Nations (ASEAN) to establish a formal mechanism to address adaptation to climate change and loss and damage associated with climate change impacts. The call was made during an international conference organized by ActionAid Vietnam and Asian Peoples’ Movement on Debt and Development (APMDD) held Tuesday. More than 40 organizations from across Asia participated in the virtual Southeast Asian Conference on Climate Change Impacts and Actions, which issued dire warnings on the impacts of climate change on food and agriculture in the region.

Southeast Asia is already suffering the devastating consequences of climate change severely affecting food production and access, and small food producers. We are facing even more horrific scenarios in the coming decades. We call on the ASEAN and Southeast Asian governments to scale up appropriate and timely responses to climate change impacts, both current and projected, specifically to empower and enable our countries, peoples and communities to build resilience and deal with loss and damage caused by climate change,” said Lidy Nacpil, coordinator of APMDD.

Nacpil added that the brunt of the impacts of climate change is being felt by farmers, fishers, agro-pastoralists, agricultural workers, rural communities and women in Southeast Asia who depend on natural resources for their livelihoods.

Hoang Phuong Thao, executive director of ActionAid Vietnam, said a Southeast Asian civil society report and recommendations to the ASEAN on the impacts of climate change will be issued this month ahead of the Synthesis Report of the Intergovernmental Panel on Climate Change (IPCC), the concluding report for the IPCC Sixth Assessment Report (AR6). Hoang said the civil society report will focus on the impacts of climate change on food and agriculture in Southeast Asia.

“Climate change is undermining Southeast Asian people and communities’ ability to produce and access food in the future. We plan to engage the ASEAN to establish a formal mechanism to address adaptation to climate change and loss and damage associated with climate change impacts. We will engage governments as well to address agriculture livelihoods resilience in the face of climate change,” said Hoang.

A study on the impacts of droughts and floods on croplands and crop production in Southeast Asia found that droughts and floods affected 13.1 M ha of croplands in the region and about 20.6 M tons of crop production was lost between 2015 and 2019. Moreover, numerous studies in the region have suggested that both inland and marine fishery production have started declining because of climate variation and climate-induced disasters. The Sixth Assessment Report (AR6) of the Intergovernmental Panel on Climate Change (IPCC) released in August predicts that Southeast Asia will be hit by rising sea levels, heat waves, and drought.

 The Sixth Assessment Report (AR6) of the Intergovernmental Panel on Climate Change (IPCC) released in August predicts that Southeast Asia will be hit by rising sea levels, heat waves, and drought.

“We challenge the ASEAN and its member governments towards greater cooperation on climate change policies and actions that place the rights and well being of communities and peoples at the center. The ASEAN could and should play a crucial role in the development and scaling up of effective responses to climate change impacts and the imperatives of building resilience and empowering peoples and communities of Southeast Asia,” said Wanun Permpibul, director of Climate Watch Thailand.

“We would like the ASEAN and its member states to call for immediate and significant increase in the overall levels of climate finance pledges by developed countries, beyond the $100 billion a year. This $100 billion goal is only a fraction of what is actually needed to address adaptation and loss and damage,” said Titi Soentoro, executive director of Aksi! for gender, social and ecological justice in Indonesia.

The effects of climate change which cannot be avoided or adapted to are predicted to cost US$1.2 trillion per year by 2060. Soentoro said this must be considered separately from adaptation and institutional mechanisms and must prioritize the most vulnerable people. Climate finance must be delivered as public funds, not as private investments that expect returns, and not in the form of loans and other debt creating instruments, she added.

The conference participants discussed five recommendations to be released as part of the report. These include the call to the ASEAN to establish an ASEAN Framework and Mechanism For Adaptation and Loss and Damage Program and Action. Speakers and participants strongly criticized Southeast Asian governments’ and the ASEAN’s current frameworks, commitments, policies, plans and actions for addressing climate change impacts as still very short of what is urgently needed.#

---

Contact:
Lani C. Villanueva
Mobile/WhatsApp
+63 9052472970

PRESS RELEASE | January 30, 2022

Photo courtesy of Jimmy Domingo

---

Climate campaigners wearing colorful tiger masks held a flash mob at the Fil-Chinese Friendship Arch in Binondo Manila Sunday (January 30) to celebrate the Tiger Lunar New Year as the year of action for total coal phase out and rapid development of renewable energy systems in the Philippines and the rest of Asia. 

Led by Asian Peoples’ Movement on Debt and Development (APMDD) and member and partner organizations Sanlakas, Philippine Movement for Climate Change (PMCJ), Oriang Women’s Movement and Partido Lakas ng Masa (PLM) - they called on China to act swiftly on its climate pronouncements and strengthen its leadership in climate action.

Similar actions were also held today in other Asian capitals.

Lidy Nacpil, APMDD coordinator said that “as we enter the Tiger Lunar New Year, we call on Chinese institutions and banks to immediately stop financing and investing in overseas coal projects in line with the announcement of President Xi Jinping last September 2021.”

 

"...as we enter the Tiger Lunar New Year, we call on Chinese institutions and banks to immediately stop financing and investing in overseas coal projects in line with the announcement of President Xi Jinping last September 2021.” – Lidy Nacpil, APMDD Coordinator 

 

She further said that “we also urge the Chinese government to stop all subsidies for fossil fuels and strongly support the building of renewable energy systems in Asia.”

On September 21, 2021, President Xi Jinping told the United Nations General Assembly that “China will step up support for other developing countries in developing green and low-carbon energy, and will not build new coal-fired power projects abroad.” During the 30th Asean-China dialogue held in November 2021 these declarations were reiterated.

China is one of the highest contributors to public finance of coal overseas. In Asia, Chinese banks and corporations have financed coal expansion projects in Bangladesh, India, Indonesia, Pakistan, Philippines, Sri Lanka, and Vietnam.

The APMDD is urging Chinese institutions and state-owned enterprises to translate President Xi’s announcement into clear policies and concrete actions regarding its involvement in coal projects in the pipeline in the countries in Asia, and to scale up its support for the much-needed acceleration of the development of the renewable energy systems in Asia.

Nacpil said that “coal is definitely on the way out, but not fast enough. We urge China to make total exit from coal and follow this with a phase out from all other fossil fuels.”

---

Contact:
Lani C. Villanueva
Mobile/WhatsApp
+63 9052472970

 

 

We, as members of civil society and mass organizations from different countries in Asia and other regions, come together in recognition of the urgency of transforming our tax and fiscal systems to make them ‘work for people and the planet.’ These have to be reoriented to turn away from blind subservience to corporate, profit-driven interests and towards the peoples’ agenda for economic justice and social transformation. At a critical time when tax revenues are gravely needed to fund essential public services and meet sustainable development targets, anti-poor tax policies and illicit financial flows have only deepened widespread inequalities within and among countries in the world

 Download Formatted PDF file

Fighting for survival amidst multiple crises of health, joblessness, violence and exclusion has become the “new normal” for many communities and sectors in Asia, with 89 million more plunged into extreme poverty and an average unemployment rate of 20% across the region in 2020. The social toll of the COVID-19 pandemic continues to be heavy for many countries with over-capacitated health systems, lower school completion rates, increasing hunger and malnutrition resulting from inadequate government responses and weakened revenue generation.

 

The historical imperative to correct imbalances and fundamental flaws of tax and fiscal systems at the national and global levels is undeniable. We commit to strengthening our campaigns and collective struggles towards these demandsfor tax and fiscal justice:

 

1. Tax the Rich, Not the Poor!

 

While the vast majority of peoples in Asia continue to struggle for health, safety, and decent work, a small minority wallow in unimaginable wealth. 41% of billionaires in the world can be found in Asia, with the highest share vis-a-vis other regions with 8% of high-net-worth individuals involved in the health and technology-related businesses. Their combined wealth is estimated at US$ 4.7 trillion. This staggering figure is vastly underestimated, as revealed by the Pandora Papers. The Pandora Papers extensively documented the blatant circumvention of national and global regulations by wealthy political and business elites in order to hide profits and assets in offshore jurisdictions with more lax regulations on corporate taxation.

 

We firmly believe that governments must proactively step in to ensure that the wealth of billionaires – socially generated through labor and natural resources of our countries – must not be allowed to accumulate without shared social benefits. That is only right and fair especially when the poor are forced to bear unjust tax burdens. 

 

We demand that governments take measures to adopt tax policies that will ensure that all incomes and profits of corporations and elites from both productive and financial activities are taxed. We call on governments to institute a progressive tax on wealth and accumulated assets of high net-worth individuals, and for countries around the world to establish cooperative mechanisms to strengthen the effective enforcement of wealth taxes by plugging loopholes that allow for illicit financial flows of untaxed wealth.

 

2. Make Taxes Work for Women and Other Marginalized Sectors

 

Across Asia, tax and fiscal systems are riddled with gender biases and discriminatory policies that deepen inequalities and reinforce economic and social exclusion. Taxation can be instruments for advancinggenderand economic justice only when these biases are firstaddressed.

 

Women face multiple and intersecting forms of discrimination, take on a disproportionate share of paid and unpaid care work, face heightened exposures to violence, and have to contend with unjust tax burdens.

 

Women’s share of unpaid care work went up as much as ten times more than men during the pandemic lockdowns when state responsibilities for children’s education and family health fell on women’s shoulders. Women’s vast contributions to economic activity through social reproduction are rendered invisible by governments and economic systems that narrowly focus on production. Women’s unpaid care work must be proactively recognized and redistributed by the state by strengthening public services and rewarded through the provision of tax credits and other support systemsfor women.

 

Despite spending a greater share of incomes on household necessities such as food, childcare, and privatized utilities, tax burdens disproportionately fall on women, especially those from poor and marginalized sectors. Tax systems that heavily rely on regressive taxes on consumptionsuch as Value Added Tax (VAT), Goods and Services Tax (GST), and excise taxes on fuel and other household necessities – rather than taxing wealth and income-- are regressive and unjustly burdensome for women and other marginalized sectors

 

Communities of indigenous and tribal peoples in many parts of Asia are often sites of corporations’ wealth extraction from their land and natural resources. Since many essential goods and services are out of reach in rural areas, regressive excise taxes on fuel and mineral products create additional barriers for access to transportation, cooking, and housing for these communities.

 

Workers from indigenous and tribal peoples in Asia are also 25% more likely to be employed in the informal sector, while those formally employed earn 18.5% less than non-indigenous workers. On top of landlessness and limited access to public services, workers from these marginalized backgrounds are forced to pay the same level of income taxes, contributing to higher rates of intergenerational poverty.

 

We believe that gender biases and other discriminatory policies in tax and fiscal systems must first be removed or corrected before taxation could be considered as a tool for advancing gender justice and reducing inequalities. 

 

3. Reclaim public services; increase and mobilize public funds for fulfilling peoples’ rights and needs!

 

 

COVID-19 has painfully shown us what it means when public health systems are underfunded and when health care and essential services remain out of reach for the vast majority of peoples.For many decades, governments have accelerated the privatization and financialization of public services in compliance with structural adjustment programs and the neoliberal paradigm of free markets imposed and peddled by international financial institutions like the IMF, WB, and the ADB. Struggles of many poor countries to meet greater public demands in this critical time underscore the failure of privatized corporations in health, energy, water, education, and telecommunications to provide comprehensive, quality, affordable, and accessible services. Profit-driven service provision has also led to massive vaccine inequality, leaving many poor countries in Asia behind despite their vulnerability to risks and social impacts of local mass transmissions.

 

 

Today, public services are further undermined by austerity measures, inadequate government spending from weak domestic resource mobilization, and false solutions offered by public-private partnerships. The massive tax abuses of wealthy individuals and corporations that have remained unchecked have also gravely eroded governments’ abilities to generate revenues for funding public services. 

 

We must press upon governments to reclaim public control of essential social services, generate more public revenues and increase allocation of funds for public services, and rechannel funds away from debt servicing and militarization towards the provision of public services to ensure that people’s rights and needs are met. 

 

4. Make MNCs Pay Their Share! Stop Corporate Tax Abuses and Other Illicit Financial Flows!

 

The Pandora Papers estimate that profits of corporations and wealth of elites held in offshore accounts may be as massive as one-third of global GDP. Legal instruments of tax havens have prevented these illicit financial flows from being subjected to public scrutiny or taxation in developing countries where wealth is generated, and where corporate tax abuses significantly erode public revenues. We must strengthen financial transparency and accountability mechanisms, ensure the full disclosure of beneficial ownership, and strengthen civil society-led initiatives to hold governments enabling IFFs to account.

 

Tax competition in the region has heightened with governments’ economic “recovery” programs, as seen in recent initiatives to lower corporate tax rates and maintain liberal tax incentive regimes. These have opened several loopholes for corporate tax abuses by multinational corporations (MNCs) through trade mis-invoicing, profit-shifting to lower-tax jurisdictions, and taking advantage of overlapping fiscal regimes and tax treaties. To compel MNCs topay their just share, we must end tax competition in the region and globally by instituting a global minimum corporate tax rate of 25-30%, closer to the recommendation of the United Nations High-Level Panel on Financial Accountability, Transparency, and Integrity (UN FACTI), and will be beneficial to developing countries. We must also call on governments to conduct an audit of all tax treaties and incentives to ensure that all agreements are aligned with domestic resource mobilization targets to fund peoples’ urgent needs.

 

5. Advance Tax Justice in the Extractive Industry!

 

The social, economic, and environmental impacts of the extractive industry have long been the focus of many community struggles and campaigns of people’s movements and civil society organizations. On top of the irreversible damages to the environment and in many cases to people’s health, the mining industry is also rife with corruption, tax abuses and other types of illicit financial flows.

 

Economic restrictions imposed by governments since 2020 have been utilized as smokescreens by mining corporations to expedite the approval of projects despite peoples’ resistance. Corporations in the extractives sector have historically benefitted from privileges of long-standing tax holidays and preferential fiscal regimes applicable to mineral resource extraction. Tax planning and avoidance of corporations, especially MNCs  in extractive industries, result in massive erosion of public revenues and intense profiteering at huge costs to people, communities, workers, the economies and environment of Asian countries.

 

We must urgently institute and enforce tighter social, financial and environmental regulations and sanctions over the extractives sector; scrap tax incentives granted to extractives industries and curb illicit financial flows; impose resource taxes on the export of raw materials from mining and other extractivist activities; and uphold the rights of communities and women affected by mining and other extractivist activities, including their right to defend their communities.

 

6. End Inequalities in global tax rules and rule-making! UN Tax Body Now!

 

Through the OECD-G7-G20 “tax deal of the rich,” the world’s richest countries and biggest economies are seeking to bind our tax systems in a more vicious race to the minimum as they benefit in a much greater degree from the proposed distribution of taxing rights and the meager global minimum tax rate of 15%. Digital services taxes (DSTs) proposed in the ‘tax deal of the rich’ also pose a risk of reproducing the regressive impacts of VAT in our countries as the costs will certainly be passed onto consumers. As peoples of developing countries that have long been impaired by the fiscal stranglehold of underfunded public services and regressive taxes, it is imperative for us to strongly reject these false solutions and urge our governments to take leadership in forwarding a just, progressive, and democratic alternative.

 

To meet peoples’ urgent needs, we need fiscal systems and global tax rules that serve to reduce the entrenched inequities and injustices of tax norms and rule-making on the national and global levels. Negotiations and decision-making on global tax rules must be done within the auspices of the United Nations, in a platform where all countries sit as equals and voices of civil society can hold governments to account. We reiterate our call for the establishment of an inter-governmental mechanism on tax matters – a UN Tax Body -- that is genuinely inclusive, democratic, transparent and accountable, where all countries sit at the table as equals and where the voices of the peoples of the Global South and of marginalised sectors, those who are most affected by inequalities in global tax rules, are heard. 

 

7. System Change, People First Before Profit!

 

We strongly believe that rebuilding broken tax and fiscal systems is an urgent task, but it cannot be achieved only through minor fixes and band-aid solutions such as those proposed in the “tax deal of the rich” and by international financial institutions like the International Monetary Fund (IMF) and the Asian Development Bank’s Asia-Pacific Tax Hub. Tax and fiscal justice can only be achieved by addressing fundamental flaws in tax and fiscal systems. 

 

Our campaigns for tax and fiscal justice is grounded on a vision for economic justice and must serve a bigger fight for system change – for thoroughgoing changes and transformation of economic systems, of gender and class relations, as well as a fundamental restructuring of the relationship between production and the environment.

 

Our struggle for tax justice must also be integrated with a systemic shift away from extractivism – the exploitation, plunder and destruction of natural resources to the huge detriment of people, communities and the planet – which is primarily driven by corporations, especially MNCs, in collusion with local elites, governments, and international financial institutions (IFIs).

 

Our vision for economic justice is founded on a fundamental reorientation towards prioritizing peoples’ needs and a rejection of neoliberalism and unbridled capitalism, reclaiming the central role of governments and civil society in regulating market and social relations.