UK Demands Pakistan Tax, Spending Reforms

Flood victims in Pakistan cross a makeshift wooden bridge to relocate. Japan has pledged to provide a USD500 million aid package for post-flood rehabilitation in Pakistan. Photo by: Jason Bushong DVIDSHUB / CC BY DVIDSHUBCC BY

At the recently concluded Pakistan Development Forum in Islamabad, Pakistan secured additional post-flood rehabilitation aid from Japan but received a warning from the U.K. to implement sweeping reforms to address corruption and misuse of aid money or risk losing financial assistance.

U.K. taxpayers cannot be expected to fund Pakistan’s development programs if the country’s own citizens do not pay their dues, U.K. Secretary of State for International Development Andrew Mitchell said, according to Reuters. Mitchell called for sweeping reforms in Pakistan’s tax system and government spending.

He added that Pakistan should also implement a campaign targeting corrupt officials and put in place a more transparent aid spending system, the Telegraph says.

Pakistani Prime Minister Yusuf Raza Gilani appealed to donors to give the flood-hit nation more time in implementing reforms, Reuters reports. 

“Please consider this as work in progress. Kindly be patient with Pakistan,” he said at the forum. “Your support and commitment is required over a much longer period, during which we can channel your assistance towards institutional and structural reforms.”

Meanwhile, Japan pledged a USD500 million aid package to boost post-flood rehabilitation efforts in Pakistan. The assistance was announced at the Pakistan Development Forum by Makiko Kikuta, Japan’s parliamentary vice minister for foreign affairs, who explained that the funding is still subject to the approval of the Diet, Japan’s bicameral legislature.

Of the promised sum, USD233 million will go toward the rehabilitation of bridges and roads in the rural communities of the Khyber-Pakhtunkhwa while USD267 million will be used to support the operations of various international organizations working in the country, according to the Associated Press of Pakistan.

Canada has also announced it would match 46.8 million Canadian dollars (USD46.3 million) in donations made by its citizens for flood-ravaged Pakistan. The money will be channeled through the Pakistan Flood Relief Fund.

“These pledges need to be grants that deliver new and substantial humanitarian aid quickly and effectively to the people on the ground who are in desperate need of assistance,” aid group Oxfam said in a statement.

Appeal for debt relief

Pakistani Interior Minister Rehman Malik, meanwhile, appealed to donor countries and international lending institutions to cancel Pakistan’s USD55 billion foreign debt to help the country recover some of the expenses it incurred while fighting terrorism.

The country has already spent USD140 billion in its anti-terrorism campaign, Malik said at the Pakistan Development Forum, which was held Nov. 14-15 in Islamabad, the Daily Times reports.

Malik’s appeal for debt relief is in contrast to an earlier statement from Pakistani Finance Minister Hafeez Shaikh that the country will not request donors to reschedule or cancel its foreign debt.

>> At Development Forum, Pakistan Eyes No Debt Cancellation

Rizza Leonzon contributed to this report.

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    Ivy Mungcal

    As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.