Issue Brief on “Pakistan’s Initiative on Debt Relief”

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On April 12, 2020, Prime Minister Imran Khan requested the world for providing debt relief to developing countries engaged in a battle with coronavirus. In his address, Prime Minister Imran Khan stated, “I appeal to world leaders, to UN Secretary General (Antonio Guterres) and to heads of the financial institutions, to launch an initiative, an initiative that will give debt relief to developing countries to combat the coronavirus.”[1] Prime Minister Imran Khan pointed out that the developing countries with very high debt to GDP ratio already lack fiscal space in order to invest in proper healthcare facilities necessary for fighting the pandemic.

In the midst of the current situation when the whole world is focused on overcoming the coronavirus, the developing countries with heavy debts are the most vulnerable. The World Bank has already termed the pandemic as a perfect storm for South Asia. There’s a risk that the decades’ performance of taking people out of poverty will be reversed.  South Asia is home to 1.8 billion people where more than 600 million people already live in poverty.[2] It has the world’s most densely populated cities with improper infrastructure and lacking basic health facilities. The lockdowns are already affecting thousands of people pushing them below the poverty line. Daily wage workers are severely being affected. The biggest challenge for developing countries like Pakistan is to save people not only from dying due to coronavirus but also from hunger.

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