Debt relief.

PAKISTAN is on the verge of receiving debt relief under the G20 plan and according to an official announcement the total amount is $2bn. There is a possibility that this amount will increase if the period of coverage is extended beyond December 2020. At the moment, the relief is being extended to loans from bilateral creditors, accompanied by a call from the G20 to private creditors to also offer 'comparable terms'. Perhaps the same terms can be extended to multilateral creditors too.

It was a wise decision though, on the part of the finance adviser, to make public his government's resolve to not approach private creditors for comparable relief. All through the period since the plan was announced till today, the financial leadership of the government and State Bank sent confusing signals to private markets regarding their intention to seek debt relief from private creditors. This ambiguity adversely impacted Pakistan's credit rating, which was put under review by Moody's, casting a shadow over the future of the country's B3 rating. The rating agency explicitly said that seeking debt relief on bilateral loans under the G20 initiative contributed to the review, but such action is unlikely to negatively impact the rating since it is under an officially sanctioned initiative...