ISLAMABAD: The government of Germany, through KfW (the German Development Bank) and the government of Pakistan, represented by the Ministry of Economic Affairs signed an agreement for the Debt Service Suspension Initiative (DSSI Phase-II) for Euro 26.213 million.
Following the original request of the Government of Pakistan for a time-bound suspension of debt service in order to mitigate the health, economic and social impact of the Covid19-crisis, the memorandum of understanding (MOU) on the Treatment of the Debt Service was signed on 9 June 2020 in Paris.
Signing of the DSSI will contribute to the much-needed relief to the Government of Pakistan to strengthen its economy in view of the challenging financial conditions faced under the Covid-19 situation. In September 2020, the Government of Germany, through KfW, had already provided a debt suspension facility to the Government of Pakistan through the DSSI Phase-I, amounting to Euro 52.766 million. The signing of this agreement coincides with the forthcoming celebrations for the 60 years of Pakistan-Germany development cooperation.
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KfW maintains an active portfolio of more than Euro 600 million financial cooperation with Pakistan in the fields of energy and climate, governance, and training and jobs creation for sustainable economic growth.
The Government of Germany is also in the process of providing another debt suspension facility (DSSI Phase-3) to the Government of Pakistan for which matters are currently under discussion. Economic Affairs officials told Business Recorder (BR) that the first step is government of Pakistan formal request for debt suspension for each phase, which is always done immediately after approval of the ECC.
The second step is signing of MoU, said the officials, adding that third step is lengthy which includes signing of separate agreements with each country and even multiple agreements with one country. Economic Affairs officials told BR that total fiscal impact of DSSI (all phases) will be of $3.785 billion from bilateral development partners.
Copyright Business Recorder, 2021