- Debt installments’ deferral was already on cards
In May 2011 a WB report confirmed Pakistan’s graduation to the ranks of middle-income countries on the basis of its per capita gross national income (GNI). Later, the PML(N) government hoped to advance the country from a lower middle income country to a high middle income state by 2025. Within less than two years of the PTI rule, Pakistan was bracketed by the Paris Club with Chad, Ethiopia and the Republic of Congo, which symbolized the country’s tragic comedown. One shudders to think of the shape of things inside the country and its ranking in the world by the time Prime Minister Imran Khan completes his tenure. ’
With the Covid-19 pandemic wreaking havoc on the global economy, there was a widespread perception that poorer countries will be hardest hit by the virus while simultaneously they would also face a debt crisis. Public debt in low- and middle-income countries totaled 51 percent of their GDP in 2018— up 5 points since 2013. With the encouragement of the WBG, IMF and others, G20 economies decided to allow the world’s poorest countries to suspend repayment of their official bilateral credit. This was more out of necessity than benevolence as otherwise there would have been no option for these countries other than refusing to pay back the instalments, thus administering a jolt to the world economic system,. The Paris Club had in fact agreed in April to freeze debt payments of the 77 poorest countries to free up cash to fight the coronavirus pandemic.
It was later on May 20 that Mr Khan thought of seeking credit by trying to get something more than had already been planned by the G-20. He urged the international forum of the rich countries to ‘do more’ in debt relief amid Covid-19 pandemic. If the idea was to get the debt cancelled, Mr Khan’s appeal fell flat. The Pakistan government then formally requested members of G-20 nations for debt relief. What Mr Khan has managed to get after his appeal to the G-20 is no more than an already agreed breather for 13 months from June 2022 to July 2023 and no light at the end of the tunnel.
