Pakistan secures moratorium on debt repayments from Paris Club

Pakistan, Ethiopia, Chad and DR Congo became the latest countries to secure a moratorium on debt repayments from the Paris Club, the group of creditor nations said, in an effort to ease the economic impact of the coronavirus crisis.

In mid-April, the G20 and the Paris Club agreed to waive most debt payments for the world's poorest countries in 2020, as sweeping virus lockdowns upturned the global economy.

Since then, 30 eligible countries have officially asked for a moratorium, the group said. The new agreements announced Tuesday mean a dozen nations have now agreed on such a measure.

"For these 12 countries, the total amount... thus deferred to date is around USD 1.1 billion, plus the deferment of pre-existing arrears," said the Paris Club.

The group was founded in 1956 and is made up of major industrialised nations that provide bilateral loans.

In all, 77 countries with a combined debt of $36 billion are eligible for the moratorium this year.

Loan payments not made this year are to spread out over three years beginning in 2022.

Virus lockdowns have put severe strains on government revenues, just as many nations need to step up health spending to combat the new disease.

Pakistan’s total foreign debts are around $113 billion as the government had paid $1.67 billion as debt servicing during the week ended on May 29, bringing down the State Bank of Pakistan’s foreign exchange reserves to around $10.36 billion — a five-month low.

The payments also brought the country’s total reserves down to a five-month low of $16.92 billion, while dollar holdings of the commercial banks increased by $34 million to $6.558 billion.

The SBP had said the government had to pay $1.669 billion as debt serving. The government was trying to defer its bilateral debt servicing payments to the G-20 countries for one year and provide temporary relief to the falling foreign exchange reserves.

In the first three quarters of the current fiscal year, the government had paid around $9.713 billion as debt servicing. The number is expected to reach $12 billion by the end of June.