Pakistan receives debt relief from Paris Club

PARIS: The Paris Club of creditor nations have agreed to suspend interest and principal repayments from Pakistan and three other countries Chad, Ethiopia, and Republic of Congo in the latest wave of countries given financial leeway to help them focus on fighting the coronavirus pandemic.

The Paris Club has so far waived $1.1 billion euros of debt servicing payments due this year from some of the world’s poorest countries under a G20 deal and more relief is on the way soon, the group said.

The Group of 20 leading economies and the Paris Club, an informal group of state creditors coordinated by the French finance ministry, agreed in April to freeze debt payments of the 77 poorest countries this year.

The latest agreements bring to 12 the number of countries to receive debt relief under the deal, with a total of $1.1 billion in debt coming due this year deferred to 2022-2024, the Paris Club said.

Paris Club president Odile Renaud-Basso said another eighteen requests are being processed and should be wrapped up quickly.

G20 creditors not members of the Paris Club, including China, are supposed to waive debt payments bilaterally on the same terms under the deal with

Renaud-Basso said a decision on whether to extend the payment suspensions would most likely come at a G20 summit in November, though some countries might need an outright reduction of their debt burdens.

The countries potentially eligible under the deal have $36 billion falling due this year, with $13 billion owed to other governments, $9 billion to private creditors and $14 billion to multilateral lenders, according to World Bank data.

Pakistan had formally requested members of G-20 nations for debt relief with a commitment of not contracting new non-concessional loans, except those allowed under the International Monetary Fund (IMF) and World Bank guidelines.

The formal requests were sent to individual countries under the G-20 Covid-19 Debt Service Suspension Initiative. Pakistan had also intimated to the IMF, World Bank and the Paris Club about its decision to formally seek debt relief.

Pakistan owes $20.7 billion to 11 members of the Group of 20 rich nations. On April 15, G-20 nations announced a freeze on debt repayments from 76 countries, including Pakistan, during May to December 2020 period, subject to the condition that each country would make a formal request.