After applying for the G-20 debt relief initiative, available to 76 of the poorest nations in the world, Pakistan has secured rescheduling agreements worth $526 million, $347 million of which comes from China, the country’s largest bilateral creditor. Covid-19 has not spared even the most stable and growing economies of the world, which makes the debt relief facility for fledgling economies a fair and justified move. In total the PTI government has now secured close to $950 million worth of relief, which will provide much needed fiscal space to work with. Early into the pandemic Prime Minister Imran Khan had requested richer countries to write-off the debt of countries like Pakistan; a proposition that had little chance of even being considered as an option by international creditors. While one can appreciate the attempt to get a free lunch, the reality is that there is no such thing, even in the worst of circumstances, such as a global pandemic.
All this is of course temporary and Pakistan will have to, at some point in the very near future, start repaying its debt according to predetermined schedules, and it is impossible to improve the condition of the economy within that time frame to become self-sufficient enough that it no longer needs to borrow more to repay its debt. Much before the coronavirus hit our shores, Pakistan’s economy was a shambles. One can accept the argument that the PTI government inherited a precarious debt situation when it came to power, but in the absence of a viable economic plan and team, the first two years were rife with indecisiveness and power politics within the finance ministry, leading to delayed action and general incompetence. Although some stability has been regained since, Pakistan still needs to borrow heavily and regularly to stay afloat. With Saudi Arabia pulling out another $1 billion that will probably be covered by China like it was the last time, and the IMF programme suspended pending fulfillment of conditions, Pakistan will continue to struggle to remain afloat, heavily dependent on foreign debt. The PTI government can celebrate the debt relief all it wants but it will only help barely keep its head above water.
https://www.pakistantoday.com.pk/2020/12/22/debt-relief-2/
Debt relief: edit in Pakistan Today, Dec 23, 2020
After applying for the G-20 debt relief initiative, available to 76 of the poorest nations in the world, Pakistan has secured rescheduling agreements worth $526 million, $347 million of which comes from China, the country’s largest bilateral creditor. Covid-19 has not spared even the most stable and growing economies of the world, which makes the debt relief facility for fledgling economies a fair and justified move. In total the PTI government has now secured close to $950 million worth of relief, which will provide much needed fiscal space to work with. Early into the pandemic Prime Minister Imran Khan had requested richer countries to write-off the debt of countries like Pakistan; a proposition that had little chance of even being considered as an option by international creditors. While one can appreciate the attempt to get a free lunch, the reality is that there is no such thing, even in the worst of circumstances, such as a global pandemic.
All this is of course temporary and Pakistan will have to, at some point in the very near future, start repaying its debt according to predetermined schedules, and it is impossible to improve the condition of the economy within that time frame to become self-sufficient enough that it no longer needs to borrow more to repay its debt. Much before the coronavirus hit our shores, Pakistan’s economy was a shambles. One can accept the argument that the PTI government inherited a precarious debt situation when it came to power, but in the absence of a viable economic plan and team, the first two years were rife with indecisiveness and power politics within the finance ministry, leading to delayed action and general incompetence. Although some stability has been regained since, Pakistan still needs to borrow heavily and regularly to stay afloat. With Saudi Arabia pulling out another $1 billion that will probably be covered by China like it was the last time, and the IMF programme suspended pending fulfillment of conditions, Pakistan will continue to struggle to remain afloat, heavily dependent on foreign debt. The PTI government can celebrate the debt relief all it wants but it will only help barely keep its head above water.
https://www.pakistantoday.com.pk/2020/12/22/debt-relief-2/
Published in Pak Media comment and Pakistan