Pakistan Set to Receive $873 Million Relief Package From Paris Club

Pakistan is set to receive $873 million in debt relief from the Paris Club of Creditor Nations, according to a statement released by the Paris Club. The international group of creditor nations revealed that it is close to finalizing the debt service suspension initiative (DSSI), tipping $2.5 billion with 36 partner countries.

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According to the reports, a series of bilateral debt service suspension agreements were signed in November, and Pakistan’s Economic Coordination Committee approved a formal request through the economic affairs division for securing relief kitty from the G-20 group of countries, under the COVID-19 support. Paris Club partners and beneficiaries will thereby continue to work closely with non-Paris Club G-20 members and stakeholders to fully implement the DSSI for providing maximum financial support to associated countries.

The Paris Club members are open to extending the DSSI implementation phase by another six months. This option will activate if the economic and financial situation doesn’t improve before the 2021  spring meetings of the World Bank and International Monetary Fund (IMF).

The statement further stated,

The Paris Club has worked actively to implement swiftly the DSSI in order to respond without delay to requests from eligible countries. It has once again proven its effectiveness and ability to coordinate closely with non-Paris Club G20 members.

Having endorsed a framework for debt treatments beyond the debt suspension period, the Paris Club also expects partners and stakeholders to effectively cooperate during these trying times. According to the Creditors’ Association, this new framework represents a multilateral approach for facilitating debt treatments for DSSI-eligible countries and associated G-20 creditors promptly.

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Chairperson of the Paris Club, Emmanuel Moulin, has stressed the importance of maintaining a unilateral front to face the challenges that threaten the global financial outlook.

He remarked,

To meet the current debt challenges many countries are facing, the Paris Club continues to show its leadership in designing and implementing multilateral initiatives on debt issues. It remains strongly committed to implementing the DSSI extension and the Common Framework in the coming months.

The DSSI framework is an internationally recognized financial architecture that aims to strengthen coordination and cooperation between the Paris Club creditor countries and associated G20 members.