ISLAMABAD: Pakistan on Monday decided to intensify efforts for debt restructuring and relief amid growing economic challenges because of the Covid-19 pandemic.

Foreign Minister Shah Mehmood Qureshi presided over a consultative session on the economic impact of the contagion at the Foreign Office, which was attended by Federal Minister for Planning and the government’s focal person on Covid-19 Asad Umar, Minister for Economic Affairs Hammad Azhar, and Adviser to PM on Finance Hafeez Sheikh.

The Covid-19 pandemic has put significant amount of additional pressure on Pakistan’s struggling economy. The major setback is expected from the fall in exports due to the scaling down of international demand and the reduction in remittances from overseas. Contraction in large-scale industrial production, and services and agriculture sector is also being expected, which would significantly bring down the projected growth rate of the economy. Moreover, the government has announced a massive relief package of nearly Rs1.13 trillion.

Although the decline in oil prices provided some cushion it may not be enough to bear the entire impact.

Covid-19 has put additional pressure on country’s struggling economy

Pakistan had in view of emerging situation proposed debt relief and restructuring for all struggling economies so that they could spend their resources for saving lives and providing relief to their masses.

Foreign Minister Qureshi carried out an extensive diplomatic outreach on this issue. He says that Pakistan’s call for easing the debt burden has found significant support.

The issue was discussed at the last meeting of G-20, the premier forum for international economic cooperation, held via video conference. The leaders expressed concerns about the consequences of Covid-19 outbreak for developing and least developed countries (LDCs) and agreed on the need for global financial safety nets. However, the proposal for support to these countries is yet to formalise.

Pakistan’s external debt is currently approximately $107 billion.

The FO meeting discussed the prospects of re-profiling of debt and how the foreign ministry could help in building coalitions for this purpose. Inputs were also provided for refining Pakistani proposal in this regard.

Speaking at the meeting, Mr Qureshi said debt relief and restructuring was needed for saving lives and helping developing countries achieve their targets for sustainable development.

Pakistan’s permanent representatives at UN in New York Amb Munir Akram and in Geneva Amb Khalil Hashmi were asked to step up their efforts in this regard at the international forums.

SCO: Continuing his contacts on the Covid-19 pandemic, FM Qureshi on Monday spoke to Secretary General of the Shanghai Cooperation Organiza­tion (SCO) Vladimir Norov.

During the conversation, the two discussed the strategies for containing the spread of novel coronavirus and the challenges posed by the growing health crisis.

The foreign minister hoped that the SCO will help in taking Pakistan’s proposal for debt relief and restructuring forward.

Mr Norov said the proposal was “the need of the hour”.

Published in Dawn, April 7th, 2020