US extends debt relief to flood-hit Pakistan

Islamabad, Sep 30 (PTI) In a major relief to Pakistan, the United States on Friday unveiled a roll-over agreement to suspend payments of USD 132 million of Pakistan's debt, after the devastating effects of the cataclysmic floods worsened the nation's economic crisis.

The US embassy said in a statement posted on its Twitter account that US Ambassador to Pakistan Donald Blome signed the agreement to extend the loan relief under the G20 debt service suspension initiative.

"Our priority is to redirect critical resources in Pakistan," it said.

The rollover is related to the Paris club agreement in April 2020 to support 73 lower-income countries during COVID-19.

The US under the scheme provided relief on USD 128 million in debt to Pakistan. The agreement to suspend payments on that debt, plus an additional USD 4 million, has now been rolled over again.

The move came as ties between Islamabad and Washington have shown signs of improvement in recent weeks, with the US playing a leading role in helping the flood-affected people by providing more than USD 66 million in assistance.

The floods triggered by historic floods affected more than 33 million people and caused about USD 40 billion in economic losses. The battered economy witnessed devaluation of the national currency and record inflation.

Former finance minister Miftah Ismail said last week that Islamabad was seeking debt relief from bilateral creditors in the wake of the flooding.

The floods have left a third of the country submerged under water and caused estimated damage of nearly USD 30 billion. The unprecedented rainfall and flooding that have injured hundreds of thousands of persons and displaced more than 33 million others. PTI SH AMS