Pakistan secures $ 526 million in G20 debt relief

ISLAMABAD:

Pakistan on Monday signed debt rescheduling deals worth $ 526 million with three other members of the wealthiest club in the G-20, bringing the overall profit to less than $ 1 billion.

Debt rescheduling agreements have been signed with France, Switzerland and China by the Economic Affairs Division, according to a document released by the Ministry of Economic Affairs.

The deal would delay repayments of $ 170 million to France, $ 9 million to Switzerland and $ 347 million to China. Pakistan is among the 76 poorest countries, mostly African countries that have decided to take advantage of the G-20 debt relief initiative.

In April, G-20 countries and Paris Club creditors announced a Debt Service Suspension Initiative (DSSI) to provide much-needed fiscal space to struggling countries in their fight against the Covid pandemic. 19.

Debt payments due for the period May-December 2020 have been announced as rescheduled by the G-20 club. The Ministry of Economic Affairs said that taking advantage of this initiative, Pakistan has entered into negotiations with 21 creditor countries for a debt suspension amounting to 1.7 billion dollars.

With the latest deals, Pakistan has so far received just over $ 950 million in temporary aid. The Ministry of Economic Affairs said Pakistan has negotiated and successfully concluded rescheduling agreements with 19 bilateral creditors, including members of the Paris Club.

Saudi Arabia and the United Arab Emirates are the two remaining countries that have not finalized debt suspension agreements with Pakistan, the sources say.

Pakistan expected a debt freeze of $ 716 million from the Kingdom and an additional $ 5 million from the United Arab Emirates. In April, Saudi Arabia was also president of the G-20 countries. From this month, Italy is the new president of the G-20.

Saudi Arabia has already decided to prematurely withdraw its cash support to Pakistan. This forced the PTI Pakistani government to borrow money from China and pay Saudi Arabia.

Saudi Arabia’s Ambassador to Pakistan Nawaf bin Saeed Al-Maliki called Prime Minister Imran Khan on Monday, a document released by the prime minister’s office said. He said that the exchange of views focused on bilateral cooperation and the Covid-19 situation.

“The determination to further strengthen the strong and long-standing brotherly ties between Pakistan and Saudi Arabia has been reaffirmed,” the statement from the Prime Minister’s Office said. During those eight months, Pakistan was to repay $ 1.7 billion to members of the G-20.

This included principal repayments of $ 1.4 billion and about $ 300 million in interest on loans. A senior official at the Ministry of Economic Affairs said Pakistan did not make any refunds to Saudi Arabia and the United Arab Emirates on the understanding that those members would eventually sign the agreements.

The United Arab Emirates also suspended the issuance of new visit and work visas to Pakistan in addition to 11 other Muslim-majority countries last month.

Economic Affairs Division Secretary Noor Ahmad appreciated the support for debt suspension provided by G20 and Paris Club countries. The secretary said it was a timely initiative that has helped Pakistan save lives and livelihoods for millions of people during the difficult time of Covid-19.

However, the World Bank recently suspended implementation of the $ 200 million Coronavirus Contagion Mitigation Project due to the failure of federal and provincial governments to put in place effective mechanisms to strengthen health systems. health.

Pakistan owes more than $ 25 billion to members of the group of 20 rich nations.

One of the eligibility criteria was that the country would not incur any new nonconcessional debt during the suspension period, other than the agreements under this initiative or in accordance with the limits agreed under the limitation policy. IMF debt or WBG policy on nonconcessional borrowing. ”.

Last month, the federal cabinet also approved making another formal request to the G-20 countries for an extension of the debt relief initiative for an additional six months (January-June) 2021.

This time, the Ministry of Economic Affairs estimated that Pakistan has the potential to get relief of $ 915 million, including $ 273 million in interest payments during the period January-June 2021.

The maximum aid of $ 385 million is expected from China, followed by $ 211 million from Japan, $ 104 million from France, $ 53.6 million from Germany, $ 65 million from the United States. United, $ 12 million from Saudi Arabia, $ 7 million from Russia and half a million dollars from the United Arab Emirates.

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