Thursday July 07, 2022

Debt relief of $2 bn: Pakistan receives draft MoU for signing from G20 countries

May 12, 2020

ISLAMABAD: Pakistan has received draft Memorandum of Understanding (MoU) for signing debt relief from G20 countries for eight months (May 1 to December 31, 2020) period to the tune of $2 billion.

Pakistan became the first country that applied for the debt relief from G20 countries. Now the draft MoU confirms that G20 accepted the application and is now ready to sign Memorandum of Understanding to this effect with Islamabad. The received MoU incorporated government to government (G2G) and government guaranteed debt for public sector enterprises (PSEs) raising hopes that the amount of debt relief might go up from earlier projection of $1.87 billion to close to $2 billion.

“The debt relief from multilaterals such as the IMF, WB and ADB is out of question as they were called themselves preferred creditors,” said the top official and added that Islamabad hoped that the G20 countries would offer another phase of debt relief for period of four to 6 months period so the debt relief might further increase in days, weeks and months ahead. The decision to this effect is expected to be taken in next G20 meetings but preparation to this effect is underway.

The official said that the G20 sent out its MoU that was shared with Finance Ministry and Ministry of Law for vetting. After signing this MoU, then agreement with bilateral countries will be done.

Against total outstanding liabilities of $20 billion, Pakistan sought debt relief of $1.87 billion from 11 bilateral creditors among the G20 countries. In case of publicly guaranteed debt provision, this facility might go close to $2 billion.

China is the largest bilateral donor as its outstanding liabilities against Pakistan stood at $9 billion, followed by Japan with $5 billion and the remaining countries, including South Korea, France, Germany, Canada, USA, Saudi Arabia and others.