G20’s six-month DSSI
Online
LAHORE
The apex chamber of Pakistan has welcomed the extension of debt suspension initiative for developing countries by the G20, calling for long-term loans relief or their permanent termination to deal with the post-corona economic crunch.
FPCCI President Mian Anjum Nisar said though the global economy has begun a gradual recovery with the reopening of businesses, the recovery has not been smooth, as many of the poor countries are still spending more on debt payments than on life-saving public services.
He also supported Prime Minister Imran Khan’s call to the international community to write off the debts of vulnerable countries, including Pakistan, as the coronavirus has shattered the economies of developing nations.
The world community should think of some kind of a debt write-off for countries like Pakistan, as its major chunk of income is being spent on debt servicing, making it very vulnerable, he said. He said that the central bank’s foreign exchange reserves have declined stridently by over one billion dollars during last one month mainly owing to external debt servicing.
“FPCCI welcomes the PM call for an outright cancellation of debt payments, who while addressing the UN session last month had stated that the poor countries suffered the most from coronavirus, therefore, these countries must be given debt relief by G20.”
He said that Prime Minister Imran Khan was the first to highlight the issue as he called for a debt-write off. “We fully support the government which has already reached out to bilateral creditors to see if it can get some relief, as the country pays a large chunk of its tax money to foreign creditors.”
Last year, Pakistan paid $11.6 billion to lenders, which is almost as much as its central bank has in its reserves at the moment, he added.
“It is very welcome that both Pakistan along with other countries have collectively called for a moratorium on interest payments, as most of their debt consist of loans, which are borrowed to pay off previous loans, trapping them in a vicious debt cycle.”
The FPCCI President said that country’s reserves had been declining since Sept 2020 due to scheduled foreign debt payments. Although, during the last few weeks, the central bank also received some inflows from multilateral and bilateral agencies, however, those inflows were less than the outflows, because of which the foreign exchange reserves posted a sharp decline.
