Pakistan secures $800m in debt relief, awaits $1bn more

[Azure]

Pakistan secures $800m in debt relief
Awaits responses of six more nations on $1b worth of transactions

ISLAMABAD:
Pakistan has so far secured $800 million worth of debt freeze deals from 14 members of the richest club of G-20 countries, as it still awaits ratification by remaining six countries including Saudi Arabia and Japan involving $1 billion transactions.

Pakistan along with 76 other poor African countries had qualified for the G-20 debt relief initiative, announced in April this year for May-December 2020 period, to combat the adverse impacts of the pandemic.

During the past seven months 14 countries ratified their agreements with Pakistan, which has provided fiscal space of $800 million to Islamabad for the time being, according to the government sources. In addition to these 14 nations, two other countries had also approached to extend debt relief to Pakistan.

The official documents showed that Pakistan has not yet finalised the debt rescheduling modalities with Japan, Russia, Saudi Arabia, United Arab Emirates and the United Kingdom.

Although these six countries have not yet ratified the debt relief related agreements, these G-20 members are expected to conclude the deal before end of next month, said a senior official of the Ministry of Economic Affairs while responding to a question. He said that Pakistan was not making repayments to these six countries too, on the understanding that these members would eventually sign-off the deals.

Pakistan was expecting a total $1.8 billion temporary debt relief from the members of G-20 nations for May-December 2020 period, according to the Ministry of Economic Affairs. This included $1.47 billion principal loans repayments and $323 million interest on the loans.

The economic affairs ministry’s estimates had shown that Pakistan can get $613 million worth of temporary relief from Saudi Arabia, $309 million from China, $23 million from Canada, $183 million from France, $99 million from Germany, $6 million from Italy, $373 million from Japan, $47 million from South Korea, $14 million from Russia, $1 million from UK and $128 million from the US.

So far, Pakistani authorities have entered into 27 debt rescheduling agreements with about 16 countries, according to the Ministry of Economic Affairs.

The maximum relief was expected from Saudi Arabia to the tune of $613 million for May-December period, said the sources. Japan was also expected to provide $373 million relief. However, agreements with these nations were still pending the final nod. The Russian Federation is also expected to ratify the revised terms by end of next month, which once ratified could provide temporary relief of $14 million.

Pakistan owes $25.4 billion to the Group of 20 rich nations as of August this year. On April 15, the G-20 nations
announced a freeze on debt repayments from 76 countries, including Pakistan, during May to December 2020 period, subject to the condition that each country would make a formal request.

Saudi Arabia has also not extended the $3 billion financial assistance package and has already prematurely withdrawn $1 billion that Pakistan paid back by arranging another loan from China. Pakistan may also payback $1 billion next month to the Kingdom, a year ahead of Pakistan’s expectations.

The G-20 nations have also decided to extend the debt relief initiative by another six months (January-June) 2021 due to second wave of the Covid-19 disease that has again started affecting the nations.

The Economic Coordination Committee of the cabinet on Friday approved to make another formal request to the G-20 nations for extension in debt relief initiative for another six months. This time, the Ministry of Economic Affairs has estimated that Pakistan can potentially get relief of $915 million, including $273 million in interest payments during January-June 2021 period.

The maximum relief of $385 million is expected from China, followed by $211 million from Japan, $104 million from France, $53.6 million from Germany, $65 million from the US, $12 million from Saudi Arabia, $7 million from Russia and half a million dollar from the UAE.

In case, Japan and Saudi Arabia also delay the relief under the second phase, the net benefits may come down to $685 million in the second phase, said the sources.

The UAE on Thursday had suspended issuance of new visit visas to Pakistan besides 11 other countries. There is no reason given by UAE regarding the decision. Pakistan foreign office confirmed the suspension and said, “We have learnt that the UAE has temporarily suspended the issuance of new visit visas until further announcement for 12 countries, including Pakistan. The suspension is not applicable on already issued visas.”

The UAE has also suspended Pakistan’s work visas and there is a need to take up this matter on priority with the UAE authorities, said Senator Anwer Baig, while speaking in The Express News show - The Review. Senator Baig said that Pakistan needed to strike a balance in its relations with the Gulf and other countries. The government should also take measures that help the country get rid of seeking assistance from friendly nations, he added.

However, the entire government is jubilant about the $1.1 billion current account surplus during July-October period of this fiscal year, conveniently ignoring over 10% dip in exports during this period.

Pakistan secures $800m in debt relief | The Express Tribune

Awaits responses of six more nations on $1b worth of transactions

tribune.com.pk

 

[IceCold]

We can forget any debt relief from Saudi Arabia, France, Uae, Japan not so sure. Need to learn to manage our own resources. Can't live on debt relief measures forever.

 

[My-Analogous]

We can forget any debt relief from Saudi Arabia, France, Uae, Japan not so sure. Need to learn to manage our own resources. Can't live on debt relief measures forever.

These poeple are making Pakistan more stronger. Remember because of India US lost all her influence in Pakistan and now they are planning to redo all Trump decisions. Soon all these people realizing that Pakistan is not a child play and I want to see Pakistan more independent financially and diplomatically

 

[Indus Pakistan]

Can't live on debt relief measures forever.

It's simple. Will people pay taxes? The blunt answer is "no". So the state is left to beg and barrow. That is the bottom line. If eveey shop keeper, trader, restaurent, barber, driver, farmer, mechanic, electrician etc paid some tax this problem would be sorted. A small amount given by 10s of millions make billions of dollars that can run countries.

The reality is only about 5 people out of 100 are even registered for tax with 95 calling themselves Pakistani's but not paying a dime to run the country.

 

[VCheng]

The reality is only about 5 people out of 100 are even registered for tax with 95 calling themselves Pakistani's but not paying a dime to run the country.

Incorrect. Almost all of the people pay a lot of indirect taxes, but only a few pay direct income tax due to the highly retrogressive taxation system. Blaming the people here is utterly wrong.

 

[Indus Pakistan]

Almost all of the people pay a lot of indirect taxes

Almost everybody, in USA and UK along with other countries pay indirect taxes. However I am sure in USA and for sure in UK we all pay personal tax or if we run a business it pays tax. You go to a typical Pakistani town less than 1% will be on the tax register and even less paying any tax. Like I said every shop keeper, trader, restaurent, barber, driver, farmer, mechanic, electrician etc should be on the tax register, keeping accounts and paying some tax. Next to nobody does ....

Most of Pakistan's economy is undocumentated and outside the purview of statistics and taxes.

 

[BATMAN]

Incorrect. Almost all of the people pay a lot of indirect taxes, but only a few pay direct income tax due to the highly retrogressive taxation system. Blaming the people here is utterly wrong.

Taxes in Pakistan are highest in the world.

Besides taxes, public is forced to pay levies, charges, funds, charities, road taxes, airport taxes, high utility tariffs... etc. and all of this is official.

Next... it's also wrong notation that people don't pay income tax.... unlike developed world... in Pakistan, income tax is deducted at the source of income and capital, example salaries, sales proceeds, bank balances, moveable and immovable property.
Of course i don't expect street hawker keeping a book of his income, but most of them pay bribes to state officials, who are appointed by the politicians.

What people of Pakistan are not informed about is that taxes are meant to be returned to the tax payer, in shape of free quality education, health, infrastructure etc,
On the contrary we have cases, where regime extort money from private property developers, who charge it back to the residents of development. Govt. openly promote and enforce money extortion, directly and indirectly.

Only thing which public of Pakistan can choose not to pay is Zakat... in order to do this, one has to declare on affidavit that he follow Zakat less religion and this happens a lot but surprisingly no one talk about it in so called Islamic state.

Next thing where misappropriation happens is in import and export business. While state sponsored smuggling remains the highest loss generating game on national exchequer.

We can forget any debt relief from Saudi Arabia, France, Uae, Japan not so sure. Need to learn to manage our own resources. Can't live on debt relief measures forever.

Saudis loans helped us to negotiate with IMF from a stronger position.
Remember, IMF refused to pay any penny to Pakistan, unless 6+billion $ rescue package was doled out by MBS.
IMF will play with you again, when you are close to bankruptcy and this time you may not get any relief 'package' from MBS and the way Imran Khan is begging everywhere, that day is coming sooner than later.

 

[IceCold]

Saudis loans helped us to negotiate with IMF from a stronger position.
Remember, IMF refused to pay any penny to Pakistan, unless 6+billion $ rescue package was doled out by MBS.
IMF will play with you again, when you are close to bankruptcy and this time you may not get any relief 'package' from MBS and the way Imran Khan is begging everywhere, that day is coming sooner than later.

Saudi loans came at a crucial time no one is denying but than came their conditions, Yemen war, giving Nawaz a jail free card (which happened) and finally accepting Israel.
So how many things do you want Pakistan to bend over just to please your Saudi Masters?
And your last comment is so out of dept and ignorance due to your sheer hatred for IK that it does not merit a response. Our foreign reserves have never been higher and our deficit has never been turned into a surplus until now. Go figure.

 

[Imran Khan]

i hate debt and this mess

 

[crankthatskunk]

Incorrect. Almost all of the people pay a lot of indirect taxes, but only a few pay direct income tax due to the highly retrogressive taxation system. Blaming the people here is utterly wrong.

Less direct tax payers means more indirect taxes, which as you say hit the poor most, because they are regressive.

The answer is that those who are capable, should be registered and pay direct taxes.

 

[achhu]

Pakistan secures $800m in debt relief
Awaits responses of six more nations on $1b worth of transactions

ISLAMABAD:
Pakistan has so far secured $800 million worth of debt freeze deals from 14 members of the richest club of G-20 countries, as it still awaits ratification by remaining six countries including Saudi Arabia and Japan involving $1 billion transactions.

Pakistan along with 76 other poor African countries had qualified for the G-20 debt relief initiative, announced in April this year for May-December 2020 period, to combat the adverse impacts of the pandemic.

During the past seven months 14 countries ratified their agreements with Pakistan, which has provided fiscal space of $800 million to Islamabad for the time being, according to the government sources. In addition to these 14 nations, two other countries had also approached to extend debt relief to Pakistan.

The official documents showed that Pakistan has not yet finalised the debt rescheduling modalities with Japan, Russia, Saudi Arabia, United Arab Emirates and the United Kingdom.

Although these six countries have not yet ratified the debt relief related agreements, these G-20 members are expected to conclude the deal before end of next month, said a senior official of the Ministry of Economic Affairs while responding to a question. He said that Pakistan was not making repayments to these six countries too, on the understanding that these members would eventually sign-off the deals.

Pakistan was expecting a total $1.8 billion temporary debt relief from the members of G-20 nations for May-December 2020 period, according to the Ministry of Economic Affairs. This included $1.47 billion principal loans repayments and $323 million interest on the loans.

The economic affairs ministry’s estimates had shown that Pakistan can get $613 million worth of temporary relief from Saudi Arabia, $309 million from China, $23 million from Canada, $183 million from France, $99 million from Germany, $6 million from Italy, $373 million from Japan, $47 million from South Korea, $14 million from Russia, $1 million from UK and $128 million from the US.

So far, Pakistani authorities have entered into 27 debt rescheduling agreements with about 16 countries, according to the Ministry of Economic Affairs.

The maximum relief was expected from Saudi Arabia to the tune of $613 million for May-December period, said the sources. Japan was also expected to provide $373 million relief. However, agreements with these nations were still pending the final nod. The Russian Federation is also expected to ratify the revised terms by end of next month, which once ratified could provide temporary relief of $14 million.

Pakistan owes $25.4 billion to the Group of 20 rich nations as of August this year. On April 15, the G-20 nations
announced a freeze on debt repayments from 76 countries, including Pakistan, during May to December 2020 period, subject to the condition that each country would make a formal request.

Saudi Arabia has also not extended the $3 billion financial assistance package and has already prematurely withdrawn $1 billion that Pakistan paid back by arranging another loan from China. Pakistan may also payback $1 billion next month to the Kingdom, a year ahead of Pakistan’s expectations.

The G-20 nations have also decided to extend the debt relief initiative by another six months (January-June) 2021 due to second wave of the Covid-19 disease that has again started affecting the nations.

The Economic Coordination Committee of the cabinet on Friday approved to make another formal request to the G-20 nations for extension in debt relief initiative for another six months. This time, the Ministry of Economic Affairs has estimated that Pakistan can potentially get relief of $915 million, including $273 million in interest payments during January-June 2021 period.

The maximum relief of $385 million is expected from China, followed by $211 million from Japan, $104 million from France, $53.6 million from Germany, $65 million from the US, $12 million from Saudi Arabia, $7 million from Russia and half a million dollar from the UAE.

In case, Japan and Saudi Arabia also delay the relief under the second phase, the net benefits may come down to $685 million in the second phase, said the sources.

The UAE on Thursday had suspended issuance of new visit visas to Pakistan besides 11 other countries. There is no reason given by UAE regarding the decision. Pakistan foreign office confirmed the suspension and said, “We have learnt that the UAE has temporarily suspended the issuance of new visit visas until further announcement for 12 countries, including Pakistan. The suspension is not applicable on already issued visas.”

The UAE has also suspended Pakistan’s work visas and there is a need to take up this matter on priority with the UAE authorities, said Senator Anwer Baig, while speaking in The Express News show - The Review. Senator Baig said that Pakistan needed to strike a balance in its relations with the Gulf and other countries. The government should also take measures that help the country get rid of seeking assistance from friendly nations, he added.

However, the entire government is jubilant about the $1.1 billion current account surplus during July-October period of this fiscal year, conveniently ignoring over 10% dip in exports during this period.

Pakistan secures $800m in debt relief | The Express Tribune

Awaits responses of six more nations on $1b worth of transactions

tribune.com.pk

very good decision by G20 nations to give debt relief to poor countries.

 

[Awan68]

i hate debt and this mess

Get drunk then, seems to be the only thing u can do.

 

[Krptonite]

i hate debt and this mess

For sovereign nations, it makes economic sense to keep a optimal debt to gdp ratio. That ratio depends on the state's economic model and policies, as long as fiscal prudence is observed it is beneficial for the nation.

No doubt corruption is an issue, but you have to also look at the long term benefits that come along with accelerated development. GoP has bet on long term growth initiatives to sustain and hopefully come out better at the end. Just a few years back, you guys had electricity shortage and from what I've read here that seems to have been addressed to a large extent. Now news of industrial units being set up points towards GoPs aim towards exploiting this energy abundance, which, hopefully will add to the national kitty in the long term.

You guys (the awam) need to be vigilant against misappropriation of these funds.

 

[VCheng]

Almost everybody, in USA and UK along with other countries pay indirect taxes. However I am sure in USA and for sure in UK we all pay personal tax or if we run a business it pays tax. You go to a typical Pakistani town less than 1% will be on the tax register and even less paying any tax. Like I said every shop keeper, trader, restaurent, barber, driver, farmer, mechanic, electrician etc should be on the tax register, keeping accounts and paying some tax. Next to nobody does ....

Most of Pakistan's economy is undocumentated and outside the purview of statistics and taxes.

You are correct that most countries have a combination of direct and indirect taxation, but the ratio in Pakistan is very lopsided in favoring indirect taxes compared to the direct ones. Because of the regressive nature of such a system, most other countries rely on a progressive system with more emphasis on direct taxes.

Taxes in Pakistan are highest in the world.

Besides taxes, public is forced to pay levies, charges, funds, charities, road taxes, airport taxes, high utility tariffs... etc. and all of this is official.

Next... it's also wrong notation that people don't pay income tax.... unlike developed world... in Pakistan, income tax is deducted at the source of income and capital, example salaries, sales proceeds, bank balances, moveable and immovable property.
Of course i don't expect street hawker keeping a book of his income, but most of them pay bribes to state officials, who are appointed by the politicians.

What people of Pakistan are not informed about is that taxes are meant to be returned to the tax payer, in shape of free quality education, health, infrastructure etc,
On the contrary we have cases, where regime extort money from private property developers, who charge it back to the residents of development. Govt. openly promote and enforce money extortion, directly and indirectly.

Only thing which public of Pakistan can choose not to pay is Zakat... in order to do this, one has to declare on affidavit that he follow Zakat less religion and this happens a lot but surprisingly no one talk about it in so called Islamic state.

Next thing where misappropriation happens is in import and export business. While state sponsored smuggling remains the highest loss generating game on national exchequer.

The public pays a lot of taxes in Pakistan, no doubt. The reason they do not see as much benefit as they expect from those taxes is mainly due to debt repayments and defense expenditure. What is left over is overwhelmed by corruption and ever-increasing social needs.

Less direct tax payers means more indirect taxes, which as you say hit the poor most, because they are regressive.

The answer is that those who are capable, should be registered and pay direct taxes.

The actual answer is that the government should amend its taxation system to rely more on direct taxes in a progressive way, and then enforce the system in a fair and transparent way.

 

[WalterWhite]

It is time to start collecting taxes from Punjab , Lalu khet of karachi pay more taxes then whole lahore. Hafeez center fire exposed the traders who were hiding millions of rupees in their shops to avoid taxes .