ISLAMABAD: The government Thursday signed a Memorandum Of Understanding (MoU) with Paris Club countries for 2nd round of Debt Service Suspension Initiative (DSSI).
The cumulative relief for the debt suspension period, ie, 1st January to 30th June, 2021, is estimated to be around $800 to $900 million.
The Ministry of Economic Affairs on its website updated that a MoU has been successfully concluded between the Government of Pakistan and 17 Paris Club countries under the DSSI announced by the G-20 countries in October, 2020.
This completes the first step for 2nd round of debt suspension from 21 bilateral countries (Paris Club and G-20).
However, the ministry unlike the past practices did not share details with media through press statements.
Under the 2nd phase of the DSSI, payment of bilateral debt and its servicing for the relevant period will remain suspended and will be repaid in six years including a grace period of one year.
This will provide much-needed relief on account of debt service obligations to Pakistan. The fiscal space made available will be utilised to mitigate socioeconomic impact of the Covid-19.
The G-20 finance ministers in their meeting held in April 2020 announced debt relief for the IDA eligible countries to mitigate socioeconomic impact of the Covid-19.
The EAD sought approval of the Economic Coordination Committee (ECC) of the cabinet for availing the G-20 DSSI.
The ECC in its meeting held on May 20, 2020, approved the proposal, and authorised EAD to proceed with signing of the MoUs with the creditor countries.
The ECC's decision was later, ratified by the Cabinet on May 21, 2020.
Pursuant to the ECC decision, the Economic Affairs Division constituted a negotiation team comprising representatives of the EAD, the Finance Division, and Law and Justice Division, and entered into individual negotiations with bilateral creditors.
It was expected that agreements with these bilateral creditors would also be finalised and signed before December 31, 2020.
The G-20 finance ministers and Central Bank governors in their meeting held on October 14, 2020, had announced extension in the DSSI for further period of six months, ie, January-June 2021.
Pakistan has already concluded bilateral agreements with 21 countries under the 1st phase of the DSSI, involving debt suspension of $1.7 billion for the period from May to December 2020.
Copyright Business Recorder, 2020
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