ISLAMABAD: The government of Pakistan and the government of Japan Tuesday signed debt suspension agreements amounting to $367 million under the G-20 Debt Service Suspension Initiative (Phase-I). Noor Ahmed, secretary, Economic Affairs Division and Kuninori Matsuda, Ambassador of Japan to Pakistan signed these agreements. The signing ceremony was witnessed by senior officials of the Japanese Embassy. In the wake of COVID-19, the G20 countries, together with the Paris Club creditors, announced a Debt Service Suspension Initiative (DSSI) to provide much-needed fiscal space to stressed countries, in order to meet their urgent economic and health needs.
The government of Pakistan, taking advantage of this initiative, entered into negotiations with 21 creditor countries for debt suspension amounting to $1.6 billion under DSSI Phase-I (April–December, 2020).
The government of Pakistan will repay the suspended amount in four years starting January 2022.
On this occasion, the secretary, EAD reiterated his appreciation for the debt suspension provided by the Japanese Government.
He highlighted that Japan is the 2nd largest bilateral lender to Pakistan.
He also thanked the government of Japan for its generous support for fighting against COVID-19 pandemic.
He lauded that Japan’s timely support helped Pakistan save lives and livelihoods of millions during the testing times.
He also acknowledged continued support of Japan for health, education, agriculture, infrastructure, disaster management, and urban services including water supply, sanitation and waste management.
While speaking on the occasion, Ambassador Matsuda also reaffirmed Japanese support to Pakistan on issues of mutual interest.
Japanese economic assistance has played and shall continue to play a vital role in the socioeconomic uplift of Pakistan, he added.
Both sides reiterated strong commitment towards further expanding bilateral economic cooperation.
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. The International Monetary Fund in its report "Second, third, fourth, and fifth reviews under the EFF and request for rephasing of access", released on April 8, 2021 noted that financing commitments from bi- and multi-lateral partners and the temporary suspension of debt service to official bilateral creditors granted under the G20 DSSI initiative will cover gross external financing needs amounting to $27 billion (9.9 percent of the GDP) over the next 12 months.
The Fund has estimated gross external financing needs for Pakistan at $27.013 billion for 2020-21, $23.643 billion for 2021-22, and $28.016 billion for 2022-23.
The Pakistani authorities have informed the Fund that they have benefited from the temporary suspension of debt service to official bilateral creditors provided under the G20 DSSI initiative, which covered $2.5 billion falling due over May 2020-June 2021 (of which $0.8 billion related to the second round of the DSSI covering Jan-June 2021 debt service).
The G20 DSSI amounting to about $2.5 billion (0.9 percent of fiscal year 2021 GDP) has helped reduce gross financing needs in the near term.
Copyright Business Recorder, 2021
Comments
Comments are closed.