- Pakistan should halt foreign debt repayments, UN policy paper
- country’s creditors should explore debt relief, the UN policy paper noted
- Pakistan has requested that the World Bank redirect $1.5 billion to $2 billion in money from slow-moving projects
Citing a UN policy note, Pakistan should halt foreign debt repayments and restructure debts with creditors after recent rains exacerbated the country’s financial situation, according to the Financial Times.
According to the newspaper, the memorandum, which the UN Development Programme (UNDP) will share with Pakistan’s government this week, urges that the country’s creditors should explore debt relief so that policymakers can prioritize disaster response funding above loan repayment.
The damage in Pakistan has been estimated at $30 billion, and the government and UN Secretary-General Antonio Guterres have blamed the flooding on climate change.
According to the Financial Times, the memo also offered debt restructuring or swaps, in which creditors would waive repayments in exchange for Pakistan committing to invest in climate-resilient infrastructure.
Floods have affected 33 million Pakistanis, caused billions of dollars in damage, and killed over 1,500 people, raising fears that Pakistan may fail to meet its debt obligations.
In light of the country’s catastrophic floods, Pakistan has requested that the World Bank redirect $1.5 billion to $2 billion in money from slow-moving projects to areas where the deluge has inflicted destruction through the repurpose program.
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