Pakistan should suspend international debt repayments and restructure loans with creditors after recent floods exacerbated the country’s financial crisis, the UKTN reported Friday, citing a UN policy paper.
The memorandum, which the UN development program will share with the Pakistani government this week, says the country’s creditors should consider debt relief so policymakers can prioritize disaster relief financing over loan repayments, the paper said.
Pakistan has previously estimated damage at $30 billion, and both the government and UN Secretary-General Antonio Guterres have blamed the flooding on climate change.
The memo further suggested debt restructurings or swaps, where creditors would let go of repayments in exchange for Pakistan agreeing to invest in climate-resilient infrastructure, FT said.
Floods have affected 33 million Pakistanis, causing billions of dollars in damage and killing more than 1,500 people – raising concerns that Pakistan will default on its debts.
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