Prime Minister Imran Khan on Sunday appealed to the international community and world bodies to "launch an initiative to give debt relief to developing countries" that are fighting to curb the spread of the novel coronavirus.
Addressing the nation and the international community through a video message, the premier said that "highly indebted countries" are facing a "lack of fiscal space" that was inhibiting their efforts to prevent the coronavirus from spreading and, at the same time, providing relief to people.
Saying the coronavirus pandemic had brought unprecedented economic and health challenges, the prime minister warned of a global recession which would be worse than the Great Depression.
"Developing countries like Pakistan cannot afford to announce huge economic packages [to mitigate the impact of the crisis. Countries like the United States and Japan have announced economic packages worth trillions of dollars whereas Pakistan could only announce a package of $8 billion."
The initiative called "Global Initiative on Debt Relief" will bring together leaders from different countries "notably from the Paris Club, Highly Indebted Poor Countries (HIPC) and heads of international organisations" to push for a more coordinated response to the pandemic, according to a statement.
Based on the premier's belief that "enhanced fiscal capacity is fundamental to recovery from the ongoing pandemic" the initiative would lay the ground for urgent debt relief for developing countries without "onerous conditionalities", the statement added.
Prime Minister Imran also called upon international leaders to "step up measures to overcome the disastrous impact of the coronavirus pandemic".
Meanwhile, the World Bank has said that South Asia is on course for its worst economic performance in 40 years, with decades of progress in the battle against poverty at risk, because of coronavirus.
"South Asia finds itself in a perfect storm of adverse effects. Tourism has dried up, supply chains have been disrupted, demand for garments has collapsed and consumer and investor sentiments have deteriorated," said the World Bank report.
Earlier this month, Pakistan and WB signed a $200 million ‘Pandemic Response Effective Project’ (PREP) that would help the poor and vulnerable cope with the immediate impact of the Covid-19 pandemic through social protection measures, food rations and remote learning education.
The bank’s support would also draw on extra $38m from eight existing projects for urgently needed medical equipment and supplies.
The Asian Development Bank also pledged $350m to Pakistan last month to support its Covid-19 emergency response and to address the socio-economic disruption associated with it.