Cash-strapped Pakistan has secured USD 800 million worth of debt freeze deals from 14 members of the G20 while it was still awaiting ratification by the remaining six countries of the grouping, including Saudi Arabia and Japan, according to a media report on Sunday. Pakistan owes USD 25.4 billion to the Group of 20 rich nations as of August this year. On April 15, the G-20 nations announced a freeze on debt repayments from 76 countries, including Pakistan, during May to December 2020 period, subject to the condition that each country would make a formal request.
Pakistan along with 76 other poor African countries had qualified for the G-20 debt relief initiative, announced in April this year for May-December 2020 period, to combat the adverse impacts of the COVID-19 pandemic. During the past seven months 14 countries ratified their agreements with Pakistan, which has provided fiscal space of USD 800 million to Islamabad for the time being, The Express Tribune reported, quoting government sources as saying.
In addition to these 14 nations, two other countries had also approached to extend debt relief to Pakistan. According to official documents, Pakistan has not yet finalised the debt rescheduling modalities with Japan, Russia, Saudi Arabia, United Arab Emirates and the United Kingdom.
Although these six countries have not yet ratified the debt relief related agreements, these G-20 members are expected to conclude the deal before end of next month, said a senior official of the Ministry of Economic Affairs. He said that Pakistan was not making repayments to these six countries too, on the understanding that these members would eventually sign-off the deals.
Pakistan was expecting a total USD 1.8 billion temporary debt relief from the members of G-20 nations for May-December 2020 period, according to the Ministry of Economic Affairs. This included USD 1.47 billion principal loans repayments and USD 323 million interest on the loans.
The economic affairs ministry’s estimates had shown that Pakistan can get USD 613 million worth of temporary relief from Saudi Arabia, USD 309 million from China, USD 23 million from Canada, USD 183 million from France, USD 99 million from Germany, USD 6 million from Italy, USD 373 million from Japan, USD 47 million from South Korea, USD 14 million from Russia, USD 1 million from the UK and USD 128 million from the US.
So far, Pakistani authorities have entered into 27 debt rescheduling agreements with about 16 countries, the report said.
The maximum relief was expected from Saudi Arabia to the tune of USD 613 million for May-December period, it said. Japan was also expected to provide USD 373 million relief. However, agreements with these nations were still pending the final nod.
Russia is also expected to ratify the revised terms by end of next month, which once ratified could provide temporary relief of USD 14 million, the report said.
Saudi Arabia has also not extended the USD 3 billion financial assistance package and has already prematurely withdrawn USD 1 billion that Pakistan paid back by arranging another loan from China. Pakistan may also payback USD 1 billion next month to the oil-rich kingdom, a year ahead of Pakistan’s expectations.
Meanwhile, the Economic Coordination Committee of the Cabinet on Friday approved to make another formal request to the G-20 nations for extension in debt relief initiative for another six months, the report said.
This time, the Ministry of Economic Affairs has estimated that Pakistan can potentially get relief of USD 915 million, including USD 273 million in interest payments during January-June 2021 period.
The maximum relief of USD 385 million is expected from China, followed by USD 211 million from Japan, USD 104 million from France, USD 53.6 million from Germany, USD 65 million from the US, USD 12 million from Saudi Arabia, USD 7 million from Russia and half a million dollar from the UAE.
In case, Japan and Saudi Arabia also delay the relief under the second phase, the net benefits may come down to USD 685 million in the second phase, said the sources.