Rescheduling Debt Agreements: Govt Creates $4b fiscal space

Pakistan has created a fiscal space of US$4billion as a result of successful negotiations for rescheduling of agreements under the Debt Service Suspension Initiative (DSSI).

The government has been trying to reschedule debt after the outbreak of Covid-19 to create fiscal space.

Pakistan is currently facing record debt and the burden of repayment of loans.

The Minister for Economic Affairs had informed in a high-level meeting while briefing on debt rescheduling.

Arranging Funds to Procure Covid Vaccine

He further said that Pakistan had also arranged US$ 725 million from bilateral/multilateral donors to procure Covid-19 vaccines and inoculate the citizens free of cost.

To date, the government had signed 31 debt rescheduling agreements with 19 creditor countries under DSSI-I.

Negotiations for the finalization of debt rescheduling agreements with the United Arab Emirates were currently underway.

DSSI-I yielded debt relief of US$ 1,608 million. 3.

The G-20 in their meeting held on 14th October 2020, extended the DSSI, for a period of six months i.e. January-June 2021, known as DSSI II (Extension).

Govt to pay Rs 3.05 trillion marks up on debt

The ECC, in its meeting held on November 20, 2020, authorized EAD to proceed with modalities for debt relief under the DSSI Extension.

The Economic Affairs Division briefed that the G-20 Finance Ministers, in their meeting held in April 2020, announced debt relief for IDA eligible countries to mitigate the socio-economic impact of Covid-19, known as DSSI-I.

The ECC in its meeting held on May 20, 2020, approved the proposal and authorized EAD to apply for debt relief and proceed with the signing of the MOUs with the creditor countries.

Pursuant to the ECC decision, Economic Affairs Division constituted a debt negotiation team comprising of EAD, Finance, and Law & Justice Divisions, and entered into negotiations with bilateral creditors.

Meanwhile, the G-20 Finance Ministers in their meeting held on 7 April 2021 extended the DSSI for a further and final period of six months (Jul – Dec 2021), known as DSSI-III (Final Extension).

Furthermore. the ECC, in its meeting held on June 9, 2021, authorized EAD to proceed with modalities for debt relief under the DSSI Final Extension.