ISLAMABAD: Prime Minister Imran Khan called for extension of the G-20 Debt Service Suspension Initiative for at least another year, and asked the rich countries to support the creation of at least $500 billion in new Special Drawing Rights (SDR) for the developing countries.
Addressing the high-level sideline event of 75th UNGA Session for "Financing for Development Summit in the Era of Covid-19 and Beyond", Prime Minister Khan said the debt relief was one of the quickest ways to create fiscal space for developing countries. Therefore, in April, he said he called for a "Global Initiative on Debt Relief."
The prime minister said the Covid-19 pandemic was inflicting unparalleled human suffering. Controlling the virus is critical to addressing both the health and the economic emergency. Pakistan subsequently initiated discussions on this matter at the UN, and co-led the Discussion Group on Debt Vulnerability.
The prime minister added that he welcomed the extensive "Menu of Options" identified by each of the six discussion groups.
"We must prioritise those actions that can have a significant impact and can be quickly implemented," he said, and added that first, extension of the G-20's Debt Service Suspension Initiative for at least another year. The request for forbearance under this initiative should not affect the country's credit rating, since this is due to force majeure, not mismanagement. Second, the Multilateral Development Banks should participate in the Debt Suspension Initiative.
Third, other short-term measures, which could cover both official and private creditors include; debt swaps for health, climate and SDGs' debt buy-backs; re-profiling debt; and regional resilience funds. Investment in sustainable infrastructure would be key to a resilient economic recovery and realisation of SDGs, and "we should create a UN Infrastructure Investment Facility to mobilize an additional $1.5 trillion annually in the developing countries".
The prime minister said the IMF estimated that developing countries would require an additional $2.5 trillion to recover from Covid-induced contraction. Rich countries should support the creation of at least $500 billion in new Special Drawing Rights and reallocation of unutilised SDRs to developing countries.
Recovery from the recession, as from the pandemic, must be inclusive and equitable. We must break the shackles of poverty and inequality. In Pakistan, our strategy of "smart lockdowns" has fortunately controlled the spread of the virus.
Yet, we are not complacent. No one is safe until everyone is safe. I hope a vaccine will be available soon. Everyone, everywhere, must have equitable and affordable access to the vaccine, as a global public good. The Covid crisis has triggered the worst recession since the 1930s Great Depression.
As usual, the poorest countries and the poorest people have been hit the hardest. "Despite our financial constraints, we have injected over $8 billion - three percent of our GDP - to protect the poor and keep the economy running," the prime minister added.
Copyright Business Recorder, 2020