ISLAMABAD, March 15: In the aftermath of debt rescheduling by the Paris Club and recently by the United States, Pakistan is expected to seek a comprehensive over $15 billion multilateral debt-swap package, official sources told Dawn.
The Polish model is currently under active consideration both at the government level and with some other friendly countries. The sources said that Poland was given complete waiver in interest while the entire debt was converted into social sector grant around a decade ago.
The issue has also been discussed with some friendly countries recently, which are among the big contributors at the multilateral level. Pakistan discussed this subject with Norway when Norway’s State Secretary for International Development Olav Kjorven met Finance Minister Shaukat Aziz last week.
The sources said the issue was also discussed indirectly with Germany and Italy as the three countries were among the top donors of the International Monetary Fund and the World Bank.
The finance minister is also expected to raise multilateral debt-swap with some of his counterparts on the sidelines of conference on financing for development being held in Mexico from March 18 to 22.
The sources said that initial response from these countries had been very encouraging but “they want us to come up with plans that how Pakistan is going to utilize these funds for the social sector development,” a senior government official said.
The relevant economic limbs of the government have been directed to come up with suggestions and social sector plans that could be discussed with the multilateral donors and individual contributors to those forums.
Pakistan’s total multilateral debt is around $16 billion. The World Bank has the largest share of around $7 billion, followed by ADB with $6.5 billion, IMF with around $1.6 billion and then a small amount of Islamic Development Bank.
Some quarters believe that multilateral forums would only come forward when Japan provided debt relief to Pakistan. President Gen Pervez Musharraf has raised the question of debt relief with Japanese leadership which has promised to consider Pakistan’s request.
Pakistan’s total external debt as of September 2001 amounted to $36.5 billion. Of this, bilateral debt amounted to $12.5 billion and multilateral debt at $15.5 billion. The remaining portion is bonds and foreign currency accounts etc.
Pakistan and Norway had officially stated that the Mexico conference should focus on the strategies to help the developing countries through grant in aids and soft loans by raising their assistance to 0.7 per cent of GDP.
The donors on the other hand are of the view that the developing countries should focus on improving financial management, improvement of skills and capacity-building to absorb the aid flows from the developed world in a transparent and resulted-oriented manner to reduce gap between the rich and poor.
