Pakistan needs long-term debt relief as it pays $10.4b in debt servicing.

LAHORE -- The business community Saturday applauded the government for securing debt relief of $1.7 billion for another six months from G20 and other creditors, calling for driving a campaign to write off Pakistan debt permanently, as the country has paid $10.4 billion on account of debt servicing during last fiscal year.

Federation of Pakistan Chambers of Commerce and Industry(FPCCI) President Mian Anjum Nisar said that the G20 countries, together with the Paris Club creditors announced a Debt Service Suspension Initiative (DSSI) amounting to $1.7 billion, which will provide much-needed fiscal space to Pakistan in its fight against the Covid-19 but the world should also pay attention to Prime Minister Imran Khan's call to write off the debts of vulnerable countries, including Pakistan, as the coronavirus has shattered the economies of developing nations.

While second wave of COVID-19 hit Pakistan at a critical point in its macroeconomic recovery, the government's ongoing efforts to ensure stability have started showing encouraging results this fiscal year. He said that G20's present rescheduling of loans along with the ADB's recent $300 million loan to Promote Macroeconomic Stability in Pakistan will support these efforts and help Pakistan to improve its export competitiveness,' he added.

He said that since fiscal year 2004, Pakistan has registered a rise-and-fall pattern of export growth reflecting underperformance in its export industry and long-term decline in export competitiveness. This is compounded by lost export growth momentum from COVID-19, which has reduced high-income countries' demand for manufacturing goods and disrupted the supply of raw materials.

The world community should now think of some kind of a debt write-off for countries like Pakistan, as its major chunk of income is being spent on debt servicing, making it very vulnerable, he said.

He said that Pakistan has increased reliance on foreign commercial loans as the country has paid $10.4 billion on account of debt servicing of external public loans including principal payment of $8.5 billion and $1.9 billion in interest payments in the last fiscal year.

'The government had to raise $3.4 billion through foreign commercial loans to meet external debt obligations and support the balance of payments. Hence, the government is conducting the highest external debt repayment and servicing ever done by any government,' he added.

It is appreciable that the government has...