Pakistan should suspend international debt repayments and restructure loans with creditors after recent floods added to the country’s financial crisis, the Financial Times reported on Friday, citing a UN policy memo.

The memorandum, which the UN Development Programme will share with the government this week, states that the country’s creditors should consider debt relief so that policymakers can prioritise financing its disaster response over loan repayment, the newspaper said.

Pakistan has earlier estimated the damage at $30 billion, and both the government and UN Secretary General Antonio Guterres have blamed the flooding on climate change.

The memo further proposed debt restructuring or swaps, where creditors would let go of repayments in exchange for Pakistan agreeing to invest in climate change-resilient infrastructure, FT said.

Floods have affected 33 million Pakistanis, inflicted billions of dollars in damage, and killed over 1,500 people — creating concern that Pakistan will not meet debts.

Earlier this week, the UN secretary general, who also visited Pakistan recently, made a forceful address to world leaders gathered for the opening day of the General Assembly’s high-level debate.

Guterres repeated the appeal he first made during his visit where he urged lenders to consider debt reduction to help those nations that were facing a possible economic collapse.

“Creditors should consider debt reduction mechanisms such as debt-climate adaptation swaps,” he said again at the UNGA. “These could have saved lives and livelihoods in Pakistan, which is drowning not only in floodwater, but in debt.”

Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Climate choices
Updated 15 Jun, 2026

Climate choices

The country is confronting increasingly volatile weather patterns with consequences for agriculture, infrastructure, public health and economic planning.
Brief opening
15 Jun, 2026

Brief opening

WE have been here before. Throughout the weekend, there was great anticipation that a tentative framework for peace...
Environmental disaster
15 Jun, 2026

Environmental disaster

IT was a heartbreaking sight. A recent news report in these pages carried a picture of a sea turtle lying half ...
Budget presser
Updated 14 Jun, 2026

Budget presser

If the FBR falters, the government will find itself in hot water sooner rather than later.
Muharram precautions
14 Jun, 2026

Muharram precautions

WITH Muharram due to start next week, the authorities have already begun annual exercises to ensure that the ...
Blood bequests
14 Jun, 2026

Blood bequests

WORLD Blood Donor Day offers a moment of “gratitude, advocacy and renewed commitment” for thalassaemia patients...