10-point ‘Lifeline’ to avoid the global economic meltdown: Prime Minister’s address to UNGA

Prime Minister Imran Khan, while addressing the special session of the UN General Assembly last Thursday, showed his leadership very eloquently by highlighting the devastations and continued challenges the entire world is facing due to the pandemics of the Covid-19. Additionally, he very profoundly described the underlying danger of a “perfect economic storm” for the developing and the underdeveloped nations. He very rightfully argued with the UNGA members and the participants about donors’ general notion (for the debt receiving countries) to stimulate/stabilize the economy and to reduce the budget deficit at the same time, a pre-requisite for additional funds!
The PM pointed out the world leaders and the bilateral &multilateral agencies that if constructive and sustainable actions are not taken now, many countries will default their debt payments, creating more miseries, instability; and “Humanitarian Crisis Without Borders.” As a matter of fact, as of last month, there are already five nations who have defaulted their debt payments and a dozen or so are also showing heavy structural stresses for discharging their debt obligations. Many multilateral donors, including the World bank, have also put several other nations on their watch lists. And if this trend will continue as the 2nd/3rd wave of the Covid-19 is re-engulfing the nations, the conditions for a global “perfect economic storm” are getting ripe. According to several world renowned economists, “Covid-19 and the global recession threaten to push 150 million people into extreme poverty and cause a “lost decade” of reverses and long-term economic “scarring”.Similarly, according to the World Bank Chief, David Malpass, “the impact of the recession could be “a threat to the maintenance of social order…”
Another economic report (by ONE) cites that 76 bottom incomecountries owe at least $573 billion in debt and are due to pay about $41 billion to service their debts before the end of 2020. But those bills are competing with rising domestic essential needs, dwindling tax revenues, falling remittances, and shrinking economies. These scenarios are creating liquidity crisis and forcing the Finance ministers to make “impossible decisions”; either to spend the limited funds on the domestic/public needs or to use them to service the debt.
According to IMF, when a country cannot or will not pay back even some of its loans – a sovereign debt default happens and as such new borrowing becomes more difficult and attracting future investments become an uphill battle. Additionally, as a result of the default, exposure to the legal liabilities happens and the entire economic foundation is destabilized, resulting into capital outflow, investments dry up, unemployment increase, health care crisis, social disorder, fiscal austerity, and finally economic meltdown.
In his address to the UNGA, the PM not only highlighted the problems due to the Covid-19 and the shortcomings by the donor agencies and the World bank in the emergency financing, but he also offered world body solutions for avoiding the imminent economic meltdown and as a result, eruption of a humanitarian crisis without borders. In his 10 points recommendations, the PM desperately pleaded the world leaders for an emergency action plan not only to successfully combat the 2nd/3rd wave of the Covid-19 but also to give some breathing room to the third world and the developing nations. In his recommendations, besides the very obvious needs like the poor countries debts forgiveness, he also pleaded for longer term payment extensions, creation of a new fund to provide emergency short term loans at ultra-low interest rates than the other sources. Additionally, the PM also suggested $1.5 trillion yearly earmark for the infrastructure projects and $100 billion allocation for combating the climate deterioration in the developing countries.
But above all, his 10th point was the most important and unique in its approach that will not only be the most effective and will cost nothing to the donor countries and the agencies. He pleaded the entire body of the nations (UN) to help the developing and the undeveloped nations to recoup their stolen money by their past corrupt rulers, politicians and the elites by transferring the national funds to their own European, USA and safe haven accounts. Prior to the publication of the Panama papers, all these details (bank name, account holder’s name, deposits, balances, money trail, etc.) were always kept secret by the “looters” as well as the institutions where these funds were kept. According to the PM, if the illicit money can be repatriated to their deserving nations, that will be more than what the assistance through his other 9 points can provide or the total money announced collectively by all the donors! This assertion (about the projected amount) by the PM is consistent with the donor institutions findings. According to the World Economic Forum, the global cost of corruption has reached to about 2.6 trillion dollars. While the World Bank has reported illicit transfer of more than 1 trillion dollars every yearby the corrupt officials from the 3rd world and developing countries to the western banks and the offshore personal accounts. This information was also shared previously by this writer in his October 29 Op-ed (VIEWS & OPINIONS) of this publication.
In short, through the UNGA platform, the PM made an excellent case for seeking the western nations assistance to helping the poor nations for the recovery of the illicit funds deposited in their countries’ banks. Nevertheless, Pakistan can learn the strategy successfully used recently by Malaysia in the recovery of the illicit moneythat was transferred in the overseas accounts by the corrupt ruler (Najib Razak) and its cronies from their state owned welfare fund, the so called 1MDB sovereign fund. Malaysian used its foreign posted bureaucrats for educating and convincing the host countries’ policy makers, banking regulators and the media about the illicit transfer of their national wealth by the corrupt government officials and the previous ruler. The bureaucrats were able to push their hostgovernments to use their domestic laws to prosecute their own institutions for the recovery and return of the illicit money back to Malaysia. As a result of this drive, the regulators in the USA, UK, Switzerland, Luxemburg, Australia, Hong Kong, UAE, Singapore, and other countries started their own investigations and found illicit transactions. Using this strategy, Malaysia has been able to recover good part of the illicit funds from the overseas bank accounts.
Since the subject and the message is still fresh in the minds of the world leaders, the PM can use Malaysian successful strategy to move forward his own global initiative for returning of the stolen money back to their legitimate nationsby building the momentum while the “iron is still hot”. On his level, he should be able to convince the heads of the other developingand underdeveloped victim countries to mobilize their own crusades for the recovery of their stolen funds, using Malaysia as the case study.
For Pakistan, he should instructhis foreign offices and the bureaucrats stationed in the foreign countries to take this baton and run to reach the finishing line by getting the cooperation of their stationed countries’ policy makers, baking regulators and the media outlets. In other words, the success of the PM’s initiative depends on the ambassadors and consulate generals diligent pursuingof the strategyon an expedited basis. Their success in pursuing and convincing the policy makers and the banking regulators of their stationed countries will be a real test to see if these highly paid bureaucrats have built deep relations for getting help in times of national crisis or they are using their overseas postings just to enjoy the western life styles, attending lavish parties (prior to the Covid-19) and socializing with the local elites, all at the costs of their poor countrymen who are struggling every day just to meet their ends.