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Pakistan signs $1.7 billion debt relief deal

By AFP

ISLAMABAD: Pakistan has secured a $1.7 billion debt relief deal to help offset financial headwinds caused by the coronavirus pandemic, officials said on Monday.

The deal, after months of negotiations with creditors, will provide a moratorium on debt payments for large swaths of the current financial year and help ease the cash-strapped country’s massive financial obligations.

“The Pakistani government has successfully negotiated and concluded rescheduling agreements with 19 bilateral creditors, including members of the Paris Club,” Pakistan’s Ministry of Economic Affairs said in a statement.

The ministry went on to describe the deal as “timely” which will help save “the lives and livelihoods of millions of people”.

Pakistan’s economy was already on life support before authorities began shutting down large segments of the economy in the spring as a series of lockdown measures were rolled out to combat the spread of the coronavirus.

Prime Minister Imran Khan has repeatedly called for international donor debt cancellation as tax revenues soared, inflation soared, the currency devalued and budget deficits widened.

Earlier this year, the G20 and the Paris Club agreed to waive most debt payments for the world’s poorest countries in 2020 as sweeping virus lockdowns rocked the global economy.

In June, Pakistan was named as one of the few countries to secure a moratorium on Paris Club debt repayments in a bid to mitigate the economic impact of the coronavirus crisis.

To add to the country’s woes, Pakistan is also facing growing questions over the huge debt it has incurred in recent years from Chinese-funded infrastructure projects.

Beijing has steadily poured money into Pakistan, investing more than $50 billion under the China-Pakistan Economic Corridor which has improved infrastructure, electricity and transport links across the country.

John Smith

The author John Smith