© Reuters. FILE PHOTO: A man, displaced by floods, wades through floodwaters to fill boxes, after rains and floods during the monsoon season in Sehwan, Pakistan September 20, 2022. REUTERS/Stringer / File Photo
(Reuters) – Pakistan should suspend international debt payments and restructure loans with creditors after recent floods intensified the country’s financial crisis, the Financial Times reported on Friday, cites a United Nations policy memo.
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 funding. for disaster response instead of loan repayment, the newspaper said.
Pakistan previously estimated the damage at $30 billion, and both the government and United Nations Secretary-General Antonio Guterres blamed the floods on climate change.
The memorandum further proposes a debt restructuring or swap, in which creditors will forgo debt payments in exchange for Pakistan agreeing to invest in climate-resilient infrastructure, the FT said. said.
Flooding has affected 33 million Pakistanis, caused billions of dollars in damage and killed more than 1,500 – creating fears that Pakistan will default on its debt.