Pakistan’s P.M. urges rich nations to help create fiscal space for developing countries by implementing short-term measures
Prime Minister Imran Khan on Tuesday urged the global community to help create fiscal space for developing nations to help their economies recover after the COVID-19 pandemic.
Addressing a meeting on ‘Financing the 2030 Agenda for Sustainable Development in the Era of COVID-19 and Beyond’ via video-link, he said this included debt relief and equitable and affordable access to a coronavirus vaccine.
Referring to G20 countries’ Debt Service Suspension Initiative, he said it should be extended by a year. “The request for forbearance under this initiative should not affect the country’s credit rating. This is due to force majeure, not mismanagement,” he claimed, adding this was the best way to “break the shackles of poverty and inequality.”
The prime minister said that in the past few months, Islamabad had initiated discussions on this matter at the U.N. and co-led a discussion group on debt vulnerability. “I welcome the extensive menu of options by each of the six discussion groups. We must prioritize those actions that can have a significant impact and can be quickly implemented,” he added.
Khan said multinational development banks should participate in debt suspension initiatives and called for short-term measures that could cover both official and private creditors, including debt swaps for health, climate and sustainable development goals; debt buybacks; re-profiling of debt; and regional resilience funds. He stressed that investment in “sustainable infrastructure will be key to economic recovery and realization of SDGs.”
Recommending the creation of a U.N. infrastructure investment facility “to mobilize an additional $1.5 trillion annually for developing countries,” he cited findings by the International Monetary Fund that developing countries would require “an additional $2.5 trillion to recover from COVID-induced contraction.” He said rich countries could help by supporting the creation of “at least $500 billion in special drawing rights and relocation of unutilized SDRs [special drawing rights].” SDR refers to a country’s quota in an international financial institution like the IMF.
Discussing Pakistan’s progress in curbing the spread of the novel coronavirus, the prime minister claimed that the government had “injected over $8 billion, 3% of our GDP to protect our poor and keep the economy going.” He said Pakistan’s strategy of “smart lockdowns” had controlled the spread of the virus, but “we are not complacent. No one is safe until everyone is safe.”