Pakistan among last countries to benefit from Paris Club debt relief – business

The Paris Club of creditor countries has agreed to suspend debt service payments from Pakistan, Chad, Ethiopia and the Republic of Congo as part of a G20 debt relief deal, the group said.

The latest deals bring the number of countries receiving debt relief under the deal to 12, with a total of $ 1.1 billion in deferred debt, the Paris Club said, adding that 30 countries had requested to benefit from it.

Debt relief will allow developing countries to focus their resources on tackling the new coronavirus crisis that has crippled the global economy.

The Group of 20 Major Economies and the Paris Club, an informal group of state creditors coordinated by France’s finance ministry, agreed in April to freeze debt payments for the 77 poorest countries this year in order to free up cash to fight the coronavirus pandemic. Countries whose debt service is paid to the World Bank and the International Monetary Fund are eligible for relief.

The decision follows a appeal from Prime Minister Imran Khan, who called on the leaders of rich countries, the UN secretary general and heads of financial institutions to ease the debt of developing countries like Pakistan so they can better fight the deadly Covid-19.

In a video message to the international community in April, the Prime Minister highlighted the difficulties faced by developing countries, especially those who are heavily indebted, in dealing with the situation and said the greatest challenge for developing countries development was to save their people from dying of pandemic and starvation due to the prolonged lockdowns triggered by the disease.

The Prime Minister’s call for debt relief, known as the “Call for the Global Debt Relief Initiative” was preceded by a major diplomatic campaign by the Foreign Ministry.

Pakistan’s debts

Comprehensive debt relief would mean the suspension of $ 1.8 billion payable by Pakistan to 11 countries from May of this year to June of next year, both in the form of the principal amount of the loan and of his interests. These amounts would then be incorporated into the remaining repayment schedule.

IMF Report Shows Pakistan Has $ 12.731 Billion In External Debt Repayment Bonds In FY2021 That Could Be Addressed As Part Of Debt Relief Plan . Although the plan targets official bilateral creditors, it is understood by authorities around the world that commercial creditors will also be urged to follow the same model. Pakistan has $ 2.545 billion in debt service payments owed to trade creditors for the next fiscal year, including $ 2.3 billion to China.

After that, $ 6.744 billion is owed to non-Paris Club bilateral creditors, including $ 3.48 billion to China, $ 2.245 to Saudi Arabia and $ 1 billion to the United Arab Emirates. After that, the country has payments of $ 1.627 billion to multilateral creditors, half of which to the Asian Development Bank and the rest to the World Bank.

Paris Club creditors owe $ 787 million next year, with Japan and France accounting for the bulk of the amount.

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