PM's plea heeded

The G-20 countries heeded prime minister Imran Khan's call to multilaterals and bilaterals to consider writing-off debt to countries like Pakistan subsequent to the onset of the coronavirus that has mercilessly pushed millions of families below the poverty line without any reprieve (temporary or permanent) to enable administrations to focus entirely on relief activities rather than on the repayment of past debt (principal and interest as and when due) for fear of default with its associated even more devastating implications for the economy. In this context, it is relevant to note that in 1996, International Monetary Fund (IMF) and the World Bank launched an initiative subsequent to extensive lobbying by the non-government organisations to 39 Highly Indebted Poor Countries (HIPC) which consisted mainly of countries in Sub-Sahara African countries (33).

Initially, the G-20 extended debt relief to 34 least developed countries that it subsequently enlarged it to 76 countries in which Pakistan is included. However, it is expected that the quantum of relief and its nature would be different for the LDCs and perhaps may also include outright write-offs whereas for the others it would be in the nature of rollover of debt and deferment of interest and repayments.

Pakistan's poverty levels have risen sharply and are projected to continue to rise as the negative impact of the coronavirus continues to unfold. Pakistan's total external debt of around 104.2 billion dollars is equivalent to 345 percent of our export receipts with the IMF projecting a peak in external debt to 112.5 billion dollars in the current year which is estimated at 45.4 percent of GDP. However, with export orders being deferred and with economic activity stifled due to the partial lockdown and with the government successfully seeking low interest loans from multilaterals (IMF/World Bank/ADB) these projections, however daunting, would not be met.