Pakistan secures $873mln debt relief from Paris Club

ISLAMABAD: Pakistan will get $873 million worth of debt servicing suspension from the Paris Club of creditor nations, the Paris Club said on Monday.

The Paris Club said it is close to fully achieve the implementation of the debt service suspension initiative (DSSI) of around $2.5 billion with 36 countries. In November, the Economic Coordination Committee of the cabinet allowed the economic affairs division to proceed with the formal request for availing the G-20 debt relief for the extended period from January to June 2021 under the Covid support. Subsequently, the federal cabinet also approved it and then bilateral debt service suspension agreements were signed.

Paris Club creditors will continue to closely coordinate with non-Paris Club G20 members and other stakeholders in the ongoing implementation of the DSSI and its extension so as to provide maximum support to beneficiary countries.

After having agreed to extend the DSSI by six months until 30 June 2021, Paris Club members will examine by the time of the 2021 spring meetings of the World Bank and International Monetary Fund if the economic and financial situation requires extending further the DSSI by another six months.

Furthermore, Paris Club members have endorsed a “common framework for debt treatments beyond the DSSI” and welcome the decision taken by the extraordinary G20 finance ministers and central bank governors’ meeting to also endorse this common framework.

Recognizing that efficiently addressing ongoing debt vulnerabilities will require a strong creditors’ coordination, the common framework sets out a multilateral approach to facilitate debt treatments for DSSI-eligible countries by Paris Club and G20 creditors in a timely, coordinated, and orderly manner, while ensuring a broad participation among creditors, including the private sector through the comparability of treatment principle.

This framework represents a major breakthrough in the international financial architecture and will strengthen the coordination between Paris Club creditors and other G20 creditors at a time when debt vulnerabilities are high, particularly in low-income countries.

“The Paris Club has worked actively to implement swiftly the DSSI in order to respond without delay to requests from eligible countries. It has once again proven its effectiveness and ability to coordinate closely with non-Paris Club G20 members,” said Emmanuel Moulin, chairperson of the Paris Club. “To meet the current debt challenges many countries are facing, the Paris Club continues to show its leadership in designing and implementing multilateral initiatives on debt issues. It remains strongly committed to implementing the DSSI extension and the Common Framework in the coming months.”