ISLAMABAD: The government said on Monday that Pakistan’s $1.8 billion debt service to G20 countries through December was currently being rescheduled and it was not seeking to reschedule a commercial loan.

The Cabinet Economic Coordinating Committee (ECC) on April 17 authorized the Ministry of Economic Affairs to meet with representatives of G20 countries for the debt relief they had announced for poor countries.

The ECC had also asked the Ministry of Economic Affairs to formally hold talks with 11 bilateral creditors for the suspension of bilateral debt.

The ECC had also advised the Ministry of Economic Affairs to return to the ECC after holding talks with bilateral creditors for the formal approval of the debt rescheduling agreements.

The comprehensive debt relief would mean the suspension of $1.8 billion payable by Pakistan to 11 countries between May this year and June next year, both in the form of the principal amount of the loan and his interests. These amounts would then be rolled into the remaining repayment schedule.

The ECC also asked the ministry to negotiate the suspension of the bilateral debt

Pakistan’s total debt payable to these countries is approximately $20.7 billion over 155 loans. Pakistan has no loans from the remaining nine members of the G20 countries. The meeting was informed that approximately $415 million, including $320 million in principal and $95.3 million in interest, was to be paid in May and June of this year.

Similarly, an amount of $1.380 billion, including the principal of $1.178 billion, will become payable between July and December during this period. Thus, the total debt to be paid by December amounts to 1.795 billion dollars, including 1.409 billion dollars in principal and 386 million dollars in interest on the loan.

The total debt payable by Pakistan to 11 bilateral lenders between May 2020 and June 2021 currently stands at $2.580 billion. The largest amount to be paid by Pakistan during this period is $625 million to Saudi Arabia, followed by $615 million to China and $578 million to Japan. In addition, approximately $281 million is to be paid to France, $193 million to the United States and $148 million to Germany. Other payables during the period include $73 million to Korea, $34.5 million to Canada, $21 million to Russia, $9 million to Italy and $1.32 million to dollars in the UK.

In this context, Ambassadors of Germany and France Bernhard Stephan Schlagheck and Dr Marc Barety and Economic Advisor Mrs Anais Boitiere met with Prime Minister’s Advisor for Finance and Revenue Dr Abdul Hafeez Shaikh and discussed the details of the debt rescheduling proposed by G20 countries and the need for any further loans, said a statement from the Ministry of Finance.

The adviser told diplomats that Pakistan’s strong stance in favor of debt rescheduling at the G20 forum was based on the belief that the poorest countries genuinely needed the aid, although Pakistan specifically benefited less from the relief.

He told the ambassadors that Pakistan was not looking for any commercial loan rescheduling so far. He also briefed them on the overall situation of the country’s economy amid the coronavirus pandemic and its future impact on the overall progress of the economy.

He said that before the pandemic, Pakistan had managed to control its current account deficit and expected a growth rate of 3% in the current financial year after observing strict financial discipline. However, after the appearance of Covid-19, growth projections had become difficult to achieve and they would now remain between -1pc and -1.5pc.

The adviser said the finance division would meet the requirements of the Debt Limitation Act before planning to take out additional loans, as most loans would be for repaying old debts.

Posted in Dawn, May 12, 2020