The Paris Club of creditor nations has agreed to suspend debt service payments from Pakistan, Chad, Ethiopia, and the Republic of Congo as part of a G20 debt relief deal, according to Reuters.
The group of 20 leading economies and the Paris Club, an informal group of state creditors coordinated by the French finance ministry, agreed in April to freeze debt payments of the 77 poorest countries this year to free up cash to fight the coronavirus pandemic.
According to the latest agreements, 12 more countries will receive debt relief under the deal with a total of $1.1 billion in debt deferred as a result, the Paris Club said, adding that 30 countries had requested relief.
On April 15, the G-20 nations announced freezing debt repayments from 76 countries, including Pakistan, from May to December 2020, subject to the condition that each country will make a formal request and Pakistan had made a request later in the month of May.
The government in May allowed economic affairs division to sign a memorandum of understanding (MoU) to avail the one-year debt payment moratorium announced by the G20 grouping under COVID-19 support to poor economies.
The Pakistani government will save nearly $1.8 billion on the account of suspension of principal and interest payment of the loans from the G20 States. The relief is the part of the gesture of G20 states that have offered suspension of principal and interest for over 76 countries, including Pakistan.
The savings from the G20 debt relief will be utilized for the welfare of the people. The government is scaling up emergency cash support to the most vulnerable households to mitigate the impact of the COVID-19 crisis. It has scaled up social safety nets under the Prime Minister Ehsas program to 16 million households (44, of the total population), from 5 million last year.