Pakistan to avail Rs 335 billion debt relief from G20 to mitigate negative effects of COVID-19

Islamabad: Pakistan will sign its debt relief agreement with G20 countries separately before the deadline of December 31, 2020, in order to avail debt relief of slightly over USD 2 billion (Rs 335 billion) to mitigate negative effects of COVID-19 pandemic, as per media reports.

A top official of the Finance Division told The News on Sunday that the work was in progress for availing debt relief announced by G20 countries.

"So far we have reconciled over one dozen creditors out of a total 20 so we are making efforts to accomplish reconciliation of exact debt data as soon as possible after which Islamabad will have to sign an agreement with each bilateral creditor separately," the top official said.

Other sources said that the deadline for accomplishing debt relief was envisaged on December 31, 2020, but the government was making an all-out effort to achieve this task within the first quarter till September 30.

This debt relief of over USD 2 billion, according to the official, provided much-needed breathing space as if it had not happened then the pressure on exchange rate might have mounted in recent months because of due payments on the external front.

Among the G20 countries, China was the largest bilateral creditor as its outstanding liabilities against Pakistan piled up to USD 9 billion, followed by Japan with USD 5 billion and the remaining countries, including South Korea, France, Germany, Canada, USA, Saudi Arabia and others.

Pakistani authorities sought help from the World Bank to develop a standard format for seeking debt relief from bilateral creditors but due to different standard requirements, it could not be developed. Now the Economic Affairs Division has developed its own format in consultation with stakeholders and Ministry of Law for moving ahead on this subject.

"We will soon start signing the separate agreement with bilateral creditors to avail this debt relief facility to mitigate negative effects of COVID-19 pandemic," the official said.