Pakistan and Germany signed debt service suspension initiative

Dr. Jassim Taqui

DG Al-Bab Institute for Strategic Studies

Islamabad, October 29,  2021: On October 27, 2021, the Government of Germany, through KfW (the German Development Bank) and the Government of Pakistan, represented by the Ministry of Economic Affairs signed an agreement for the Debt Service Suspension Initiative (DSSI Phase-II) for Euro 26.213 million.

The signing of this agreement coincides with the forthcoming celebrations for the 60 years of Pakistan-Germany development cooperation. 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.

Following the original request of the Government of Pakistan for a time-bound suspension of debt service to mitigate the health, economic and social impact of the COVID19-crisis, the Memorandum of Understanding (MOU) on the Treatment of the Debt Service was signed on 9 June 2020 in Paris.

The signing of the DSSI will contribute to the much-needed relief to the Government of Pakistan to strengthen its economy because of the challenging financial conditions faced under the Covid-19 situation. In September 2020 the Government of Germany, through KfW, had already provided a debt suspension facility to the Government of Pakistan through the DSSI Phase-I, amounting to Euro 52.766 million.

The Government of Germany 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.