From a report of August this year, Pakistan is under the limelight of being obligated to $25.4 billion to the G-20 nations. A mere treaty of April 15th declared an induration on reimbursement from 76 countries in which Pakistan is also on the list. Even the treaty had a proviso that each country would have to make a formal request.
The G20 debt relief initiative
After the start of the pandemic, the G20 debt relief initiative was set in motion to raise up funds for the countries to fight Covid-19 and also to shore up their economies. The G20 initiative has also summoned banks and investment funds to participate but there was no sign of it. Even China which is considered a big creditor country failed to include all state-owned institutions in responding to requests for debt relief. In accordance to the debt congeal deals from 14 members of the G20, Pakistan secured $800 million. Along with 76 poor African countries, Pakistan had qualified in this major initiative.
Net benefits to a downfall
Along with 16 countries, Pakistani authorities have entered into 27 debt adjourning agreements as reported. From Saudi Arabia to the scale of $613 million, the maximum relief was expected. Japan was also included in this relief list. Whatsoever, the agreements with these nations were still waiting for the final indication. On one hand, Russia is expected to ratify the terms but Saudi Arabia on the other hand has not extended the $3 billion financial assistance package and by the so on the report of The Ministry of Economic Affairs, Saudi Arabia beforehand has already withdrawn $1 billion that Pakistan paid back by systemizing another loan from China. Also, Pakistan may pay back $1 billion next month to the oil-rich kingdom, a year ahead of Pakistan’s expectations.
The major fiscal space
As to now, during the past seven months, a margin for maneuver has been set up as 14 countries have endorsed their agreement with Pakistan. Also incorporation to these 14 countries, two other countries had also come near to prolong the debt relief to Pakistan. A senior official of the Ministry of Economic Affairs reported that as Pakistan has not yet corroborated their agreements with the six countries so it is expected that the members of G20 might conclude the deal before the end of the next month. They could eventually sign off the deals because of Pakistan not making the repayments.
The Policy Times Suggestions
- Keeping in mind the net benefits of the downfall, the delay of the relief must be avoided.The initiative was taken to fight the pandemic, so to fulfill its aims, the Ministry must take necessary steps.
- Pakistan must finalize the debt rescheduling modalities with the six countries to prevent the loss of the economy.