The debt service suspension initiative will support and strengthen Pakistan’s economy
The Government of Germany, through KfW (the German Development Bank) and the Government of Pakistan, represented by the Ministry of Economic Affairs signed an agreement for the Debt Service Suspension Initiative (DSSI Phase-II) for Euro 26.213 million.
The agreement was signed on On October 27, 2021.
“The signing of the DSSI will contribute to the much-needed relief to the Government of Pakistan to strengthen its economy in view of the challenging financial conditions faced under the COVID-19 situation,” said the official statement released by the German embassy in Pakistan.
The signing of this agreement coincides with the forthcoming celebrations for the 60 years of Pakistan-Germany development cooperation.
The current agreement comes after the $4.2 Saudi support package for Pakistan to support the country’s economy. After the support package, Pakistan’s currency bounced back to gain 2.5 rupees against the US dollar as the currency closed the trade at Rs172.78.
Another debt suspension facility
The German government is also in the process of providing another debt suspension facility (DSSI Phase-3) to the Government of Pakistan for which matters are currently under discussion.
KfW maintains an active portfolio of more than Euro 600 million Financial Cooperation with Pakistan in the fields of energy and climate, governance, and training and jobs creation for sustainable economic growth.
In September 2020, the Government of Germany, through KfW, had already provided a debt suspension facility to the Government of Pakistan through the DSSI Phase-I, amounting to 52.766 million Euros.
Following the original request of the Government of Pakistan for a time-bound suspension of debt service in order to mitigate the health, economic and social impact of the COVID-19 crisis, the Memorandum of Understanding (MOU) on the Treatment of the Debt Service was signed on 9 June 2020 in Paris.