• Sat. May 14th, 2022

Cash-strapped Pakistan gets $800m in debt relief from G20 countries: report

ByTina R. Wimmer

Mar 11, 2021
ISLAMABAD: Running out of money Pakistan secured $800 million in debt freeze agreements from 14 members of the G20 while it was still awaiting its ratification by the six other countries of the grouping, including Saudi Arabia and Japan, according to a media report on Sunday.
Pakistan owes the Group of 20 wealthy nations $25.4 billion in August this year. On April 15, the G-20 countries announced a freeze on debt repayments for 76 countries, including Pakistan, for the period from May to December 2020, subject to each country making a formal request.
Pakistan, along with 76 other poor African countries, had qualified for the G-20 debt relief initiative, announced in April this year for the period May-December 2020, to combat the effects harmful effects of the Covid-19 pandemic.
In the past seven months, 14 countries have ratified their agreements with Pakistan, which has provided $800 million in fiscal space to Islamabad so far, The Express Tribune reported, citing government sources.
In addition to these 14 nations, two other countries had also approached to extend debt relief to Pakistan.
According to official documents, Pakistan has yet to finalize debt rescheduling terms with Japan, Russia, Saudi Arabia, the United Arab Emirates and the United Kingdom.
Although these six countries have not yet ratified the agreements related to debt relief, these G-20 members should conclude the agreement before the end of next month, said a senior official from the Ministry of Economic Affairs. .
He said Pakistan was also not reimbursing those six countries on the understanding that those members would eventually sign the agreements.
Pakistan was expecting total temporary debt relief of $1.8 billion from members of G-20 countries for the period May-December 2020, according to the Ministry of Economic Affairs. This included $1.47 billion in principal repayments and $323 million in loan interest.
Economic Affairs Ministry estimates had shown that Pakistan could get $613m in temporary aid from Saudi Arabia, $309m from China, $23m from Canada, $183m from France , $99 million from Germany, $6 million from Italy, $373 million from Japan. , $47 million from South Korea, $14 million from Russia, $1 million from the United Kingdom and $128 million from the United States.
So far, Pakistani authorities have concluded 27 debt rescheduling agreements with about 16 countries, according to the report.
The maximum aid was expected from Saudi Arabia at $613 million for the May-December period, he said. Japan was also to provide relief of $373 million. However, the agreements with these nations were still awaiting the final green light.
Russia is also expected to ratify the revised terms by the end of next month, which, once ratified, could provide temporary relief of $14 million, according to the report.
Saudi Arabia has also not extended the $3 billion financial aid package and has already prematurely withdrawn $1 billion which Pakistan repaid by arranging another loan from China. Pakistan could also repay $1 billion next month to the oil-rich kingdom, a year ahead of Pakistan’s expectations.
Meanwhile, the Cabinet Economic Coordinating Committee on Friday approved making another formal request to G-20 countries for a six-month extension of the debt relief initiative, according to the report.
This time, the Ministry of Economic Affairs has estimated that Pakistan can potentially get $915 million in relief, including $273 million in interest payments during the period January-June 2021.
The maximum relief 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 States, $12 million from Saudi Arabia, $7 million from Russia and half a million dollars from the UAE.
In the event that Japan and Saudi Arabia also delay relief under the second phase, the net benefits could drop to $685 million in the second phase, the sources said.