ALTHOUGH G-20 countries have promised to suspend debt payments of developing countries for a period of
one year, yet given the unprecedented crisis posed by Covid-19, they are required to do more to avert more disasters in these countries. Managing Director of IMF Kristalina Georgieva, in an interview, also admitted that some debts are not sustainable and therefore some action has to be taken either to re-profile or restructure or in some cases write-off such debts.
Closure of businesses to flatten curve of the contagion has badly jolted economies around the world. While developed countries are also facing hardships, situation in developing countries such as Pakistan is far more serious as governments do not have sufficient resources to protect their vulnerable segments of the society for next few months. This is why they are taking the risk of easing restrictions to provide livelihood to their peoples. One can take cue of how seriously the pandemic has affected Pakistan’s economy from statement of Adviser on Finance Hafeez Sheikh who in an interview with a foreign news agency said the country’s fiscal deficit would surge to whopping nine percent in the current fiscal year while revenue and exports have also taken major hits. In this backdrop, countries like Pakistan require major support to emerge from adverse impacts of the lockdown. It is really heartening to note that international financial institutions such as IMF are advocating for waiving off some loans.
The IMF itself should take the lead and write-off loans of Pakistan and other developing countries, at least, for current year. Then it should also push G-20 countries and other lenders to follow the suit. Suspending the loan payments will not serve any purpose but only add burden on poor countries in coming years. Permanent relief is required to these countries so that they could extend maximum financial assistance to disadvantaged segments of the society and keep their economies afloat. Prime Minister Imran Khan has proved to be a convincing voice for developing nations. In order to give impetus to his debt relief call, he should extensively engage with leadership of developing countries. A united voice supported by the UN will definitely have an impact to get maximum relief from resource rich countries.
