ECC wink sought for 15 debt rescheduling deals

ISLAMABAD: The Economic Affairs Division (EAD) has sought the endorsement of the Economic Coordination Committee (ECC) to sign 15 debt rescheduling agreements with various creditors, finalized under the Debt Service Suspension Initiative debt (DSSI), official sources said company registrar.

Sharing the details, the sources said that the G-20 finance ministers, at their meeting held in April 2020, announced debt relief for IDA-eligible countries to mitigate the socio-economic impact. economics of Covid-19, known as DSSI-1. The ECC, at its meeting on May 20, 2020, approved and authorized EAD to seek debt relief and proceed with the signing of MoUs with creditor countries.

The sources said that in accordance with the ECC decision, the Economic Affairs Division has started negotiations with bilateral creditors. To date, under DSSI-1, 31 debt rescheduling agreements with 19 creditor countries have been signed. Negotiations for the finalization of debt rescheduling agreements with the United Arab Emirates are currently underway. DSSI-1 provided debt relief of $1.608 billion.

The G-20 at its meeting on October 14, 2020 extended the DSSI for a period of six months, from January to June 2021, known as DSSI-II (extension). The ECC, at its meeting on November 20, 2020, authorized EAD to proceed with the debt relief modalities under the DSSI-II. So far, 29 debt rescheduling agreements with 13 creditor countries have been signed. Negotiations for the finalization of debt rescheduling agreements with Russia, the United Arab Emirates and the United States are ongoing. DSSI-II provided debt relief of $1.130 billion.

Rescheduling of deals under DSSI: EAD creates $4 billion in fiscal space

The G-20 Finance Ministers, at their meeting on April 7, 2021, extended debt relief for a new and final six-month period (July-December 2021), known as DSSI-III (final extension). The ECC, in its meeting of June 9, 2021, authorized the EAD to proceed with the debt relief modalities under the DSSI-III. So far, 19 debt rescheduling agreements with 5 creditor countries have been signed while negotiations for the finalization of debt rescheduling agreements with Belgium, Italy, Japan, Russia, Spain , the United Kingdom and the United States are in progress. Debt relief under DSS-III is approximately $950 million.

According to sources, six agreements for DSSI-II with Italy, Japan and the UK have been negotiated and finalized. Eight agreements for DSSI-III with Austria, France, Korea, the Netherlands, Sweden and Switzerland were also negotiated and finalized and a combined agreement for DSSI-1, DSSI-II and DSSI-III with Saudi Arabia was also finalized.

According to the sources, the outstanding debt of Italy, Japan and the United Kingdom was $5.990 billion as of December 31, 2022, including debt suspended under DSSI-II (January-June 2021) , was as follows: Italy $1.05 million, Japan $197.98 million and the UK $0.31 million (total $99.34 million).

Loans from seven other countries amounted to $3.370 billion as of June 30, 2021, of which Austria’s loan was $26 million, France $1.725 billion, Korea $422 million , the Netherlands $84 million, Saudi Arabia (DSSI-1, II & III) $961 million, Sweden $73 million and Switzerland $79 million.

Suspended debt (July-December-2021) was $195.61 million, of which Austria loaned $2.70 million, France $107.73 million, Korea $27, $39 million, Netherlands $3.74 million, Saudi Arabia (DSSI-1, II & II) $38.56 million, Sweden $5.89 million and Switzerland 5 $.89 million.

Given the agreed terms and conditions, ECC approval is sought for the signing of 15 debt rescheduling agreements with various creditor countries. Secretary EAD, being the authorized person, will sign these agreements on behalf of the Government of Pakistan.

The sources maintained that the summary was not distributed to stakeholders since the debt rescheduling agreements were negotiated by the debt negotiation team and the individual agreements were duly approved by the Finance Division. and verified by the Law and Justice Division.

Copyright Business Recorder, 2022

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