Debt relief measures outlined by G20, IMF, WB for developing countries


17th April 2020 (GNP): On April 12, Imran had appealed to the leaders of rich countries, the UN secretary general and heads of financial institutions to give debt relief to developing countries such as Pakistan so that they could combat Covid-19.In a video message to the international community broadcast by TV channels, the prime minister had highlighted the difficulties being faced by developing countries — particularly those burdened by heavy debt — in handling the situation.

Following the prime minister’s appeal, G20 announced that Pakistan was included in a group of 72 countries eligible for debt relief on all principal and interest payments to official bilateral creditors.

According to the details, the suspension period for debt relief will start from May 1 and continue till Dec 1, 2020.

All debt service falling due in this period will be packaged into a new loan on which the payments will not start until June 2022. Then it will be paid over the subsequent three years. A standardized term sheet has been made for all the payments clubbed under the relief plan.

Foreign minister shah Mehmood Qureshi held a press conference after debt relief measures were outlined by G20, IMF, WB for developing countries.

FM said Pakistan was expected to get major relief from the IMF, “Prime Minister Imran Khan had appealed to the world leaders and institutions to restructure loans of the developing countries to cope with the coronavirus challenge.” Also said that the economic relief will enable developing countries to divert their resources to the protection of lives of the people and make their health systems more effective to respond to the challenge.

The FM said the world had responded to Prime Minister Imran Khan’s call for debt relief. “Pakistan is expected to get debt relief from May 1. The G-20 countries, International Monetary Fund and the World Bank have decided to provide debt relief to the developing countries, about 70 countries including Pakistan will benefit from it. The relief will be for a period of one year,” he said.

“The Prime Minister’s call was endorsed by the UN Secretary General, the IMF and the G-20 countries,” he said.

Earlier, UN Secretary-General Antonio Guterres had supported Prime Minister Imran Khan’s call for a Global Initiative for debt relief to developing countries, amid the coronavirus outbreak.

At a regular virtual news briefing in New York, the spokesperson of the UN Secretary General, Stephane Dujarric said Imran Khan’s initiative was in the same spirit as the Secretary General’s own position.

"The developing world lacks fiscal space and a proper health system. Therefore, the most appropriate response that other countries can give at the moment is granting debt relief,” he said.

He went on to say that this is the fourth global initiative that Imran had spearheaded during his short term as prime minister.

"His drive against climate change on global forums, his campaign against eliminating Islamophobia, action against corrupt and illicit financial flows, and now his initiative against debt relief.

"Adviser to the Prime Minister on Finance Dr Abdul Hafeez Sheikh has said that we need to wait in order to gauge the impact of the debt relief. However, I can say this that the impact will be significant,” he said.