Adviser says $1.8bln loan rescheduling under process

ISLAMABAD: Pakistan is about to get $1.8 billion of its foreign loans rescheduled to have a temporary buffer in repayments and shore up its financial position jolted by the novel coronavirus pandemic.

Adviser to the Prime Minister on Finance and Revenue Hafeez Shaikh on Monday said the loans due in debt servicing to G20 countries till December 2020 are under process of rescheduling. However, he said the government is not going for any commercial loan rescheduling until now.

The finance adviser appreciated the support offered by the friendly countries and hoped that the cooperation would continue in future for the benefit of the people of the three countries.

Shaikh was talking to Ambassador of Germany Bernhard Stephan Schlagheck, accompanied by French Ambassador Marc Barety and Economic Counselor Anais Boitiere.

Chinese loans worth $19 billion outweigh all other bilateral loans in the country’s foreign loan portfolio. The loans also include ones from commercial lenders from China. Saudi Arab and UAE loaned $3 billion and $2 billion to lend support to Pakistan’s balance of payment position for one year.

The G-20 countries agreed debt freeze for world’s poorest countries, including Pakistan, to help them fight the economic and health implications of the novel coronavirus. Pakistan applied for debt relief and was expected to get $1.8 billion of loans rolled over by 11 bilateral creditors of the grouping.

“Pakistan’s firm stance in favour of debt rescheduling drive at the G-20 forum was based on the belief that the poorer countries genuinely require this assistance though Pakistan specifically had benefited lesser from the said relief,” a statement quoted the finance adviser as saying.

“Before the pandemic, Pakistan was successfully able to control its current account deficit and was expecting a growth of 3 percent during the ongoing financial year after observing strict financial discipline. However, after the outbreak the growth projections have become difficult to realize,” he said.

Shaikh said it is expected that the growth might remain between -1 to -1.5 percent due to the ongoing circumstances.

The adviser said the finance division would adhere to the requirements of debt limitation law before planning to take up additional burden as most of the loans would be for the purpose of clearing old debt stocks.

The ambassadors discussed with the adviser the details of the debt rescheduling offered by G-20 countries and the need for any further loans. The meeting was apprised about the details of the relief package offered to the vulnerable by the government through Ehsaas Program and the steps, which the government is taking to support the small and medium enterprise sector.