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Business & Finance

US says it provided $128mn in debt relief to Pakistan in 2020

  • "Through efforts like this, the U.S. and Pakistan are working together to redirect critical resources to the COVID19 pandemic response,” stated the US Embassy Islamabad
17 Dec 2020

The United States has said that it has provided $128 million in debt relief to Pakistan in 2020, under the G20 Debt Service Suspension Initiative (DSSI).

“Under the G20 Debt Service Suspension Initiative, the U.S. provided $128 million in debt relief to Pakistan in 2020. Through efforts like this, the U.S. and Pakistan are working together to redirect critical resources to the COVID19 pandemic response,” stated the US Embassy Islamabad, in a tweet post on Thursday.

The DSSI was approved in April. It offers a temporary suspension of "official sector" or government-to-government debt payments to 73 countries including Pakistan.

The payments covered are not forgiven but delayed, with a repayment period of five years and a one-year grace period. The re-scheduling is intended to be what is known as Net Present Value (NPV) neutral.

The G-20 Finance Ministers and Central Bank Governors in their meeting held on October 14, 2020 had announced extension in the DSSI for further period of six months, ie, January-June 2021. This would bring additional debt relief of $ 800-900 million depending upon exchange rate and interest rate variation.

According to media reports, Pakistan was expecting a total $ 1.8 billion temporary relief from the G 20 member countries if agreements with the concerned countries are reached. Of this, Pakistan can avail $ 613 million temporary relief from Saudi Arabia, followed by $ 309 million from China, $ 23 million from Canada, $ 183 million from France, $ 99 million from Germany, $ 6 million from Italy, $ 373 million from UK and $ 128 million from the US.