ISLAMABAD – Pakistan likely to get the Paris Club Debt Relief under dealwith the G – 20.
Pakistan and the number of countries to get Paris Club debt relief thisyear under a deal with the G20 is set to rise after the Club – a group ofstate creditors – clarified the terms, a French finance ministry sourcesaid on Tuesday.
The Group of 20 leading economies and the Paris Club, an informal group ofstate creditors coordinated by France’s finance ministry, agreed last monthto freeze the debt payments of the 77 poorest countries this year to freeup cash for them to fight the coronavirus pandemic.
The countries likely to sign off shortly include Cameroon, the DemocraticRepublic of Congo, the Republic of Congo, Ethiopia, Pakistan andMauritania, another source familiar with the matter said. Usually, theParis Club asks borrowing governments to seek the same debt repaymentconditions from private-sector creditors.
However, some debtor countries have hesitated to sign up, fearing that itcould hurt their credit rating after rating agencies said a failure to payprivate creditors who had agreed to suspend debt payments in parallel withthe Club could be considered a default. Kenya’s finance minister said lastweek that this was one of the reasons Nairobi would not apply.
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So far, the Paris Club has signed agreements only with the Caribbeanislands of Dominica and Grenada, and Mali and Nepal, the French sourcesaid. But the Club has now made clear that applicant countries can specifythat they want relief only on their debts to state creditors. “We’ve gotabout 20 more in the process of finalising the documents to sign agreementsand we are expecting another dozen to make requests in the coming days,”the source said.
With this exception to that rule, the rating agencies now understand thatthe debt relief programme is not negative for ratings, the source said.Countries eligible for the programme have a combined $36 billion fallingdue this year, composed of $13 billion owed to other governments, $9billion to private creditors, and the rest to multilateral developmentlenders.
