Pakistan is expected to receive a debt relief this year from the Paris Club.
The reports stated that Pakistan, among other countries will be granted a waiver as part of a global push to give debt relief to the least-developed countries.
A number of countries will get Paris Club debt relief this year under a deal with the G20, a group of state creditors. Both groups agreed last month to freeze the debt payments of the 77 poorest countries in 2020 to free up cash for them to fight the coronavirus pandemic.
So far, the Paris Club has signed agreements only with the Caribbean islands of Dominica and Grenada, and Mali and Nepal, the source said.
The report stated that the Paris Club asks borrowing governments to seek the same debt repayment conditions from private-sector creditors. With this exception to that rule, the rating agencies now understand that the debt relief program is not negative for ratings.
The countries likely to sign off shortly include Cameroon, the Democratic Republic of Congo, the Republic of Congo, Ethiopia, Pakistan and Mauritania, another source familiar with the matter said. Usually, the Paris Club asks borrowing governments to seek the same debt repayment conditions from private-sector creditors.
However, some debtor countries have hesitated to sign up, fearing that it could hurt their credit rating after rating agencies said a failure to pay private creditors who had agreed to suspend debt payments in parallel with the Club could be considered a default. Kenya’s finance minister said last week that this was one of the reasons Nairobi would not apply.
