KARACHI: The G20 has decided to extend its debt relief for six months to help poor countries fight the Covid-19 pandemic.

Originally approved in May 2020, the Debt Service Suspension Initiative (DSSI) was supposed to last until December 2020. Pakistan was approved under this initiative and $ 1.8 billion of its payments to the government. The servicing of the external debt maturing until December has been rescheduled as part of the latter.

With the new announcement made on Wednesday, all debt service payments owed to bilateral creditors from December to June 2021 will also be rescheduled.

“In light of continued liquidity pressure, while gradually addressing debt vulnerabilities, we have agreed to extend the ISD by six months and review by the spring meetings of the IMF and WBG 2021 whether the economic and financial situation requires to extend further the DSSI of 6 additional months ”, indicates the press release published by the finance ministers and the governors of the central banks of the G20 at the end of the meeting on Wednesday.

The group said it found the initiative “significantly facilitating increased spending related to the pandemic” in countries that benefited from it.

More than 70 countries have participated in the initiative since its launch in May. According to data from the DSSI page of the World Bank website, Pakistan has saved $ 2.706 billion in debt service payments under the initiative. The data is updated until October 6, 2020 and “on the basis of monthly projections for May-December 2020, on the basis of public and government-guaranteed debt outstanding and disbursed at the end of 2018”.

Estimates are not available for the savings that the extension to June 2021 will bring. The money saved this year from debt service payments will be repaid later in a few years after the initiative expires.

Posted in Dawn, le 15 October 2020