Pakistan has secured a $ 1.7 billion debt relief deal to help offset financial hardship caused by the coronavirus pandemic, officials said on Monday.
The deal, after months of negotiations with creditors, will include a moratorium on debt payments for large parts of the current fiscal 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,” the country’s economic ministry 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.”
The Pakistani 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 put in place to combat the spread of the coronavirus.
Prime Minister Imran Khan has repeatedly called for the cancellation of international donor debt as tax revenues collapsed, inflation soared, the currency was devalued and budget deficits widened.
Earlier this year, the G20 and the Paris Club agreed to waive most of the debt payments of the world’s poorest countries in 2020, as large-scale virus lockdowns turned the global economy around.
In June, Pakistan was named as one of the few countries to secure a moratorium on debt repayment from the Paris Club in a bid to mitigate the economic impact of the coronavirus crisis.
To add to the country’s woes, Pakistan also faces growing questions about the massive amount of debt it has incurred in recent years on infrastructure projects funded by China.
Beijing has regularly poured money into Pakistan, investing more than $ 50 billion through the China-Pakistan Economic Corridor which has improved infrastructure, electricity and transport links across the country.
Islamabad, Pakistan | AFP