ISLAMABAD: Washington on Friday rolled over an agreement to suspend service payments on $132 million of Pakistan's debt, the US embassy in Islamabad said, as the country faces an economic crisis exacerbated by devastating floods.

Pakistan's economy is facing a balance of payments crisis, a widening current account deficit, a slide in its currency to historic lows, and inflation crossing 27%. Devastating floods meanwhile engulfed large swathes of the country in late August, killing more than 1,500 people and causing damage estimated at $30 billion, fanning fears that Pakistan would not meet its debt obligations.

The US Ambassador to Pakistan Donald Blome signed the agreement to extend the loan relief under the G20 debt service suspension initiative, the embassy said in a statement, adding: "Our priority is to redirect critical resources in Pakistan." The rollover is related to the Paris club agreement in April 2020 to support 73 lower income countries during Covid, under which the United States provided relief on $128 million in debt to Pakistan. Also read: US urges Pakistan to seek debt relief from China The agreement to suspend payments on that debt, plus an additional $4 million, has now been rolled over again. Former finance minister Miftah Ismail said last week that Islamabad was seeking debt relief from bilateral creditors in the wake of flooding, but emphasised the government was not seeking any relief from commercial banks or Eurobond creditors.

Published in The Daily National Courier, October, 01 2022

Like Business on Facebook, follow @DailyNCourier on Twitter to stay informed and join in the conversation.