Riyadh still has not signed the debt suspension pact
Saudi Arabia did not sign a formal agreement with Pakistan for the suspension of debt under the G-20 initiative before the deadline for doing so expired.
The club of the richest economies in the world, the G-20, had asked candidate countries to conclude debt suspension agreements before December 31, 2020 for phase 1 (May to December 2020).
Pakistan and Kingdom of Saudi Arabia (KSA) did not sign a formal debt suspension agreement until December 31, the Ministry of Economic Affairs confirmed to the Express Tribune on Thursday.
The ministry cited no reason for the delay, but said Pakistan was still awaiting the official signing.
He added that Pakistan had not regularly repaid its debt to Saudi Arabia after the kingdom confirmed in July last year the suspension of official bilateral credit under the G-20 initiative.
“Saudi Arabia has never refused to sign a formal agreement [to this effect]”The ministry said.
In its summary last month for the federal cabinet on the extension of the debt relief of the G-20, the Ministry of Economic Affairs had said that “the agreements with these bilateral creditors will also be finalized and signed before the deadline of the December 31, 2020 “.
In a document published by the Ministry of Economic Affairs last month said that “Pakistan has already concluded bilateral agreements with 21 countries under the 1st phase of the DSSI, involving a suspension of the debt of 1.7 billion dollars for the period of May to December 2020 “.
Initially, the ministry estimated the temporary debt suspension during the first phase at $ 2 billion, including $ 615 million to $ 715 million from Saudi Arabia. However, he now expects temporary debt relief of $ 1.7 billion in the first phase, including $ 516 million from Saudi Arabia.
Without Saudi Arabia, total debt relief fell to $ 1.2 billion.
However, the World Bank, which monitors the debt relief initiative, showed on its website the temporary relief in Pakistan to $ 3.7 billion, against Islamabad’s estimate of $ 2.6 billion. dollars.
Pakistan owes the G-20 countries more than $ 25 billion.
As of December, the World Bank had listed 73 countries qualified for the initiative, but 28 of them did not participate.
The debt deferral initiative was aimed at low-income economies so that they have fiscal space to deal with the consequences of the novel coronavirus pandemic. The initiative does not alleviate the structurally high debt burden that countries like Pakistan face.
Pakistan’s debt-to-GDP ratio has grown to over 87%, up from 72.5% since 2018. Debt servicing absorbs a significant portion of the budget each year, while the government has not been able to improve their income.
The suspension period, which was originally scheduled to end on December 31, 2020, has been extended until June 2021. The IMF, working with the World Bank, has urged bilateral creditors to further extend the suspension period. But these multilateral creditors have not suspended their debts.