ISLAMABAD: The government on Monday said that Pakistan’s $1.8bn debt servicing to G20 countries till Dec­ember was currently under process of rescheduling and it was not seeking rescheduling of any commercial loan.

The Economic Coordination Committee (ECC) of the Cabinet authorised the Ministry of Economic Affairs on April 17 to hold talks with representatives of G20 countries for the debt relief they had announced for the poor countries.

The ECC had also asked the ministry of economic affairs to formally hold talks with 11 bilateral creditors for suspension of bilateral debt.

The ECC had also advised the economic affairs ministry to get back to the ECC after holding talks with bilateral creditors for formal approval of debt rescheduling agreements.

The overall debt relief would mean suspension of $1.8bn payable by Pakistan to 11 countries during May this year to June next year, both in the shape of the principal amount of the loan and its interest. These amounts would then be built into the remaining repayment schedule.

ECC has also asked ministry to negotiate suspension of bilateral debt

Pakistan’s total debt payable to these nations stands at about $20.7bn under 155 loans. Pakistan does not have any loan from the remaining nine members of the G20 countries. The meeting was informed that about $415 million, including $320 million as principal amount and $95.3 million as interest, was due to be paid in May and June this year.

Likewise, an amount of $1.380bn, including the principal amount of $1.178bn, will become payable between July and December during this period. As such, the total debt payable between now and December this stands at $1.795bn, including $1.409bn as principal amount and $386 million as interest on the loan.

The total debt to be paid by Pakistan to 11 bilateral lenders between May 2020 and June 2021 currently stands at $2.580bn. The biggest amount payable by Pakistan during this period is $625 million to Saudi Arabia, followed by $615 million to China and $578 million to Japan. Also, about $281 million is due to be paid to France, $193 million to the US and $148 million to Germany. Other debt payable during the period includes $73 million to Korea, $34.5 million to Canada, $21 million to Russia, $9 million to Italy and $1.32 million to the UK.

In this context, ambassadors of Germany and France Bernhard Stephan Schla­gheck and Dr Marc Barety and Economic Counselor Mrs Anais Boitiere met Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh and discussed details of the debt rescheduling offered by G20 countries and the need for any further loans, a finance ministry statement said.

The adviser told the diplomats that Pakistan’s firm stance in favour of debt rescheduling drive at the G20 forum was based on the belief that poorer countries genuinely required this assistance though Pakistan specifically had benefited lesser from the relief.

He told the ambassadors that Pakistan was not seeking any commercial loan rescheduling till now. He also briefed them on the overall picture of the country’s economy amid the Coronavirus pandemic and its future impact on the overall progress of the economy.

He said that before the pandemic, Pakistan was successfully able to control its current account deficit and was expecting a growth rate of 3pc during the ongoing financial year after observing strict financial discipline. However, after the outbreak of the Covid-19 the growth projections had become difficult to realise and it would now remain between -1pc and -1.5pc.

The adviser said that the finance division would adhere to requirements of the Debt Limitation Act before planning to take up additional loans as most of the loans would be for the purpose of clearing old debt.

Published in Dawn, May 12th, 2020