The Financial Times on Friday cited a UN policy memorandum saying that Pakistan should suspend international debt repayments and restructure debt with creditors following the country’s financial crisis following the recent floods.
The newspaper said the United Nations Development Program will share with Pakistan’s government this week a plan that the country’s creditors should consider debt relief so that policymakers can prioritize funding their disaster response over debt repayment.
Pakistan has previously estimated damages at $30 billion, and both the government and UN Secretary-General Antonio Guterres have blamed the floods on climate change.
The FT said the memo proposed debt restructuring or swaps, where creditors would forgo repayments in exchange for Pakistan agreeing to invest in climate change-resilient infrastructure.
The floods have affected 33 million Pakistanis, caused billions of dollars in damage, and killed more than 1,500 – raising concerns that Pakistan will not repay the debt.
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