The initiative is aimed at supporting and strengthening Pakistan’s economy
The Government of Germany, through KfW (the German Development Bank), signed an agreement with Pakistan’s Ministry of Economic Affairs for the Debt Service Suspension Initiative (DSSI Phase-II) for Euro 26.213 million. Pakistan and Germany sign 26 million Euro Debt Service Suspension Initiative
“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 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, Germany already provided a debt suspension facility to the Government of Pakistan through the DSSI Phase-I, amounting to 52.766 million Euros.
Saudi support package
The current agreement comes after the $4.2 Saudi support package for Pakistan to support the country’s economy. Saudi Fund for Development (SFD) has announced to deposit $3 billion with the State Bank of Pakistan to help support its foreign reserves as well as $1.2 billion to finance Pakistan’s oil products trade during the year.
Japan and Pakistan agreed on debt deferral of US$200 million
On October 22, 2021, the Governments of Japan and Pakistan agreed on debt deferral amounting to approximately US$200 million on October 22, 2021, as the second phase of “the G20 Debt Service Suspension Initiative (DSSI)”. Earlier, Pakistan and Japan agreed on the first debt deferral amounting to US$370 million on April 27, 2021. The total amount of deferred debt has now reached arpund US$570 million, which will widen the fiscal space for the Government of Pakistan to restore its economy affected by the COVID-19 pandemic.