Pakistan to get relief of $2.41 billion in 2020 debt repayments: WB

June 21, 2020 (MLN): Under the Debt Service Suspension Initiative (DSSI) backed by G-20, the World Bank, the IMF and the Paris Club of sovereign lenders, Pakistan would reschedule its $2.41 billion worth of debt repayments in 2020, according to the estimates published in a new database from the World Bank.

The main objective of the COVID-19 linked DSSI is to enable an effective crisis response. Borrowers therefore commit to use freed-up resources to increase social, health, or economic spending in response to the crisis. However, it does not cancel these payments but only postpones them to a later date. The suspension period will begin from May 1 and will last until end-2020.

According to the figures of World Bank, in terms of savings, Pakistan is the on the second position among the eligible DSSI countries that would reap the largest benefit from the initiative following Angola. This is followed by Kenya and Myanmar with $802.6 million and $371.6 million respectively.

The graph below shows Pakistan’s total debt service payments due over the period of 2020 to 2024, as per which $8.947 billion is due as country’s total debt servicing in 2020, of which total official multilateral stands at $3.4 billion, total official bilateral at $4.326 billion, non-official $850.45 million and $362.5 million is to bondholders.

Comparing savings with Gross domestic product (GDP), the rescheduling of $2.4 billion during the year will translate into savings of 0.6% of the GDP.

Meanwhile, it is important to note that the suspension of payments will be NPV neutral, repayment period will be three years with a one-year grace period and be achieved either through rescheduling or refinancing.

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