ISLAMABAD: The Economic Affairs Division, government of Pakistan and the Saudi Fund for Development (SFD) signed two debt service suspension agreements amounting to $846 million under the G-20 Debt Service Suspension Initiative (DSSI) framework.
Nawaf bin Saeed Al-Malkiy, ambassador of the Kingdom of Saudi Arabia to Pakistan witnessed the signing ceremony held here.
Dr Saud Ayid RAlshammari, director general for Asia represented the SFD in the signing ceremony.
This amount which was due to be paid during the testing period from May 2020 to December 2021 will now be paid over a period of six years, starting from 2022 in semi-annual installments.
Due to the support extended by the SFD – one of the major bilateral development partners of Pakistan – along with other bilateral creditor countries, the G-20 DSSI has provided the fiscal space which was necessary to deal with the urgent health and socioeconomic needs of Pakistan.
The total amount of debt that has been suspended and rescheduled under the DSSI framework, covering the period from May 2020 to December 2021, is $ 3,688 million.
Pakistan has already concluded and signed 80 agreements with 21 bilateral creditors for the rescheduling of its debts under the G-20 DSSI framework, amounting to rescheduling of $ 2,088 million.
The signing of agreements with the SFD brings the total rescheduled amount to $ 2,934 million, while negotiations for the remaining $ 754 million are underway. The agreements for this amount are expected to be signed with respective bilateral development partners within the current fiscal year.
The International Monetary Fund (IMF) in its latest report titled, Article IV Consultation, Sixth Review under the extended arrangement under the extended fund facility, and requests for waivers of applicability and nonobservance of performance criteria and rephasing of access has projected Pakistan gross external financing needs at $ 30.417 billion for 2021-22 i.e. 9.5 percent of GDP and $ 41.882 billion for 2023-24, ie, 11.2 percent of GDP.
The report notes that financing commitments from bilateral and multilateral partners, and the temporary suspension of debt service to official bilateral creditors granted under the G20 DSSI initiative, will help cover public gross external financing needs in fiscal year 2022 and until the end of the programme in October 2022.
It further stated that the DSSI covers about $ 3.8 billion falling due over May 2020–Dec 2021, of which about: (i) US $ 1.1 billion relates to the second round of DSSI covering the January–June 2021 debt service; and (ii) US$1.0 billion to the third DSSI round covering July–December 2021.
The fiscal year 2022 official financing includes support from China ($ 6.6 billion, including the rollover of $ 4 billion SAFE deposits), UAE (rollover of $ 2 billion), World Bank ($ 2.4 billion), Asian Development Bank ($ 1.2 billion), Islamic Development Bank ($ 1 billion), and other bilateral support under the G20 initiative ($ 1 billion).
The government continues to benefit from the temporary suspension of debt service to official bilateral creditors provided under the G-20 DSSI initiative, which will cover $ 1.0 billion falling due during July-December 2021 (third round of DSSI).
Copyright Business Recorder, 2022