Tag: debt relief

Cash-Strapped Pakistan Secures $ 800 Million in Debt Relief From G20 Nations: Report

During the past seven months, 14 countries ratified their agreements with Pakistan, which has provided fiscal space of US $ 800 million to Islamabad for the time being.

Islamabad Cash-strapped Pakistan has secured US $ 800 million worth of debt freeze deals from 14 members of the G20 while it still awaits ratification by the remaining six countries of the grouping, including Saudi Arabia and Japan, according to a media report on Sunday.

Pakistan owes US $ 25.4 billion to the group of 20 rich nations, as of August this year. On April 15th, 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.

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 COVID-19 pandemic.

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

According to official documents, 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.

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 US $ 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 US $ 1.47 billion principal loans repayments and US $ 323 million interest on the loans.

Also read: Why India Should Support an SDR Issue by the International Monetary Fund

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

So far, Pakistani authorities have entered into 27 debt rescheduling agreements with about 16 countries, the report said.

The maximum relief was expected from Saudi Arabia to the tune of US $ 613 million for May-December period, it said. Japan was also expected to provide US $ 373 million relief. However, agreements with these nations were still pending the final nod.

Russia is also expected to ratify the revised terms by end of next month, which once ratified could provide temporary relief of US $ 14 million, the report said.

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

Meanwhile, 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, the report said.

This time, the Ministry of Economic Affairs has estimated that Pakistan can potentially get relief of US $ 915 million, including US $ 273 million in interest payments during January-June 2021 period.

The maximum relief of US $ 385 million is expected from China, followed by US $ 211 million from Japan, US $ 104 million from France, US $ 53.6 million from Germany, US $ 65 million from the US, US $ 12 million from Saudi Arabia, US $ 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 US $ 685 million in the second phase, said the sources.

Sudan Becomes Third Arab State to Set Aside Hostilities With Israel This Year

US President Donald Trump sealed the agreement in a phone call with Israeli Prime Minister Benjamin Netanyahu and Sudanese Prime Minister Abdalla Hamdok.

Washington: Israel and Sudan agreed on Friday to take steps to normalise relations in a deal brokered with the help of the United States, making Khartoum the third Arab government to set aside hostilities with Israel in the last two months.

US President Donald Trump, seeking re-election on November 3, 2020, sealed the agreement in a phone call with Israeli Prime Minister Benjamin Netanyahu and Sudanese Prime Minister Abdalla Hamdok and Transitional Council Head Abdel Fattah al-Burhan, senior US officials said.

Trump’s decision this week to remove Sudan from the US list of state sponsors of terrorism paved the way for the accord with Israel, marking a foreign policy achievement for the Republican president as he seeks a second term trailing in opinion polls behind Democratic rival Joe Biden.

Netanyahu hailed it as a “new era” for the region, but the Palestinian leadership, watching as more of their Arab brethren appear to give their quest for statehood a lower priority, called it a “new stab in the back.”

“The leaders agreed to the normalisation of relations between Sudan and Israel and to end the state of belligerence between their nations,” according to a joint statement issued by the three countries that also promised US help for Khartoum to secure international debt relief.

Israel and Sudan plan to begin by opening economic and trade links, with an initial focus on agriculture, the joint statement said. A senior US official, speaking on condition of anonymity, said such issues as the formal establishment of diplomatic ties would be resolved later.

Trump touted the deal to reporters in the Oval Office with the Israeli and Sudanese leaders on the line in a three-way phone call, saying at least five other countries wanted to follow suit and normalise relations with Israel.

“Do you think ‘Sleepy Joe’ could have made this deal?” Trump asked Netanyahu, using the president’s pejorative nickname for Biden a day after their final, rancorous debate of the 2020 presidential campaign. “Somehow I don’t think so.”

Netanyahu, reliant on bipartisan support for Israel in Washington, responded haltingly: “Well, Mr President, one thing I can tell you, is, um, uh, we appreciate the help for peace from anyone in America.”

Trump’s aides view his pro-Israel policies as appealing to Christian evangelical voters, who are among his biggest supporters.

In recent weeks the United Arab Emirates and Bahrain became the first Arab states in a quarter of a century to agree to formal links with Israel, forged largely through shared fears of Iran.

Trump insisted the Palestinians also “are wanting to do something” but offered no proof. Palestinian leaders have condemned recent Arab overtures to Israel as a betrayal of their nationalist cause and have refused to engage with the Trump administration, seeing it as biased in favour of Israel.

Also read: Breaking Taboo, UAE, Bahrain Sign Formal Agreements With Israel at White House

“No one has the right to speak in the name of the Palestinian people and the name of the Palestinian cause,” Palestinian President Mahmoud Abbas said in a statement.

Terrorism list

Trump announced on Monday he would take Sudan off the terrorism list once it had deposited $335 million it had pledged to pay in compensation. Khartoum has since placed the funds in a special escrow account for victims of al Qaeda attacks on U.S. embassies in Kenya and Tanzania in 1998.

The White House called Trump’s intention to remove Sudan from the terrorism list a “pivotal turning point” for Khartoum, which is seeking to emerge from decades of isolation.

The military and civilian leaders of Sudan‘s transitional government have been divided over how fast and how far to go in establishing ties with Israel. A sticking point in the negotiations was Sudan‘s insistence that any announcement of Khartoum’s delisting from the terrorism designation not be explicitly linked to relations with Israel.

The Sudanese premier wants approval from a yet-to-be formed parliament to proceed with broader, formal normalisation, and that may not be a quick process given sensitivities and civilian-military differences. It is still unclear when the assembly will be created.

“Agreement on normalisation with Israel will be decided after completion of the constitutional institutions through the formation of the legislative council,” Sudanese Foreign Minister Omar Gamareldin said on state television shortly after Friday’s announcement.

The new agreement was negotiated on the US side by a team that included Trump son-in-law and senior adviser Jared Kushner, who called the normalisation deals the start of a “paradigm shift” in the Middle East.

He said Sudan‘s decision was symbolically significant because it was in Khartoum in 1967 that the Arab League decided not to recognise Israel‘s right to exist.

Sudan‘s designation as a state sponsor of terrorism dates to its toppled ruler Omar al-Bashir and has made it difficult for its transitional government to access urgently needed debt relief and foreign financing.

Many in Sudan say the designation, imposed in 1993 because Washington believed Bashir was supporting militant groups, has become outdated since he was removed last year.

US congressional legislation is needed to shield Khartoum from future legal claims over past attacks to ensure the flow of payments to the embassy bombing victims and their families.

(Reuters)