The United Nations – Financial Times said: Flood-hit Pakistan should suspend debt payments

The United Nations – Financial Times said: Flood-hit Pakistan should suspend debt payments

(Reuters) – Pakistan should suspend international debt repayments and restructure loans with creditors, the Financial Times reported on Friday, citing a United Nations policy note, after recent floods exacerbated the country’s financial crisis.

The paper said the memorandum, which the United Nations Development Program will share with the Pakistani government this week, states that the country’s creditors should consider debt relief so that policymakers can prioritize financing its disaster response over repaying loans.

Pakistan earlier estimated the damage at about $30 billion, and both the government and UN Secretary-General Antonio Guterres blamed climate change for the floods.

The Financial Times said the memo also proposed a debt restructuring or swap, in which creditors would forgo payments in exchange for Pakistan agreeing to invest in climate-resilient infrastructure.

The floods have affected 33 million Pakistanis, damaged billions of dollars, and killed more than 1,500 people – creating fears that Pakistan will not repay its debts.

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