Islamabad: Pakistan has inked a debt relief agreement with South Korea to defer the payment of around $20 million in loans.
This accord falls under the framework of the G-20 Debt Service Suspension Agreement (DSSI) that offered debt service payment relief to the poorest countries upon request to help them alleviate the economic repercussions caused by the COVID-19 pandemic.
The agreement was signed by Secretary of Economic Affairs Dr Kazim iNiaz and Ambassador of the Republic of Korea to Pakistan Suh Sangpyo on May 15 in Islamabad. Initially scheduled for repayment between July and December 2021, the $19.9 million amount “will now be repaid over a period of six years (including a one-year grace period) in semi-annual installments” according to the Ministry of Economic Affairs statement.
The statement added that the support provided by Pakistan’s development partners under the G-20 DSSI has created the fiscal space to address Pakistan’s urgent health and economic needs.
Under the DSSI framework, the total amount of debt suspended, covering the repayment period from May 2020 to December 2021, stands at $3.68 billion.
“Pakistan has already concluded and signed 104 agreements with 21 bilateral creditors, totalling $3.63 billion in deferred debt repayments under the G-20 DSSI.”
'Pakistan would not default'
With the signing of the agreement with South Korea, the total has now reached $3.65 billion.
Meanwhile, negotiations for the remaining agreements to be signed under the G-20 DSSI are currently ongoing.
Pakistan has been facing a severe economic crisis amid surging inflation, dwindling forex reserves, and currency depreciation. The cash-strapped country desperately awaits the resumption of the International Monetary Fund (IMF) loan facility to secure a $1.1 billion tranche from the $7 billion bailout programme. The delay in the IMF programme has been causing significant economic losses to the country.
However, Finance Minister Ishaq Dar assured that “Pakistan would not default”, with or without the IMF, and added that the country could not afford to take any additional extreme measures to accommodate the IMF.
