Pak and Germany sign Debt Service Suspension Initiative

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 Ansar M Bhatti

ISLAMABAD: The Government of Germany, through KfW (the German Development Bank) and the Government of Pakistan, represented by the Ministry of Economic Affairs signed an agreement for the Debt Service Suspension Initiative (DSSI Phase-II) for Euro 26.213 million.

The signing of this agreement coincides with the forthcoming celebrations for the 60 years of Pakistan-Germany development cooperation. KfW maintains an active portfolio of more than Euro 600 million Financial Cooperation with Pakistan in the fields of energy and climate, governance, and training and jobs creation for sustainable economic growth.

Following the original request of the Government of Pakistan for a time-bound suspension of debt service in order to mitigate the health, economic and social impact of the COVID19-crisis, the Memorandum of Understanding (MOU) on the Treatment of the Debt Service was signed on 9 June 2020 in Paris.

Signing of the DSSI will contribute to the much-needed relief to the Government of Pakistan to strengthen its economy in view of the challenging financial conditions faced under the Covid-19 situation. In September 2020 the Government of Germany, through KfW, had already provided a debt suspension facility to the Government of Pakistan through the DSSI Phase-I, amounting to Euro 52.766 million.

The Government of Germany is also in the process of providing another debt suspension facility (DSSI Phase-3) to the Government of Pakistan for which matters are currently under discussion.

It may be mentioned here that a few other European countries are ready to help Pakistani under the DSSI and agreements to effect are likely to be signed soon. After the initiative, Pakistan economic woes are likely to be lessened albeit not at a large scale.