KARACHI: Abu Dhabi Fund for Development (ADFD) has suspended debt service repayments for year 2020 for several countries, including Pakistan, to help them weather the economic fallout of the COVID-19 pandemic, the state-owned fund said on Sunday.
The fund provides financial assistance to developing countries and companies in the UAE by supporting key sectors such as education, health, energy, transport, housing, agriculture and industry.
“The initiative over the payment of installments and interests that covers the period from January 1 to December 31, 2020 will be implemented by ADFD in accordance with the national law and internal procedures,” the fund said in a statement.
The decision has been taken for eligible countries and individual businesses in the developing world upon a request for forbearance, ADFD said, “The sole objective behind the decision is to help them weather the economic fallout of the COVID-19 pandemic.”
Pakistan is among the 90 countries where the UAE fund is supporting 473 development projects with a total investment of about $22 billion.
ADFD said the move is in line with the UAE government’s decision to support a plan by the Group of 20 major economies to help developing countries meet their financing needs while they are addressing the impacts of the coronavirus outbreak.
In mid-April, the G-20 agreed on a coordinated approach for a suspension of debt and services payments for the world’s poorest countries to provide stimulus to the global economy.
Last month, Pakistan’s de facto Finance Minister Dr. Abdul Hafeez Shaikh told Arab News that the G-20 debt relief will help Pakistan save some $1.8 billion, which will be used for welfare programs.
Economists believe that the ADFD decision will ease pressure on Pakistan’s foreign exchange reserves, as the South Asian country would get some respite for discharging its external liabilities.
“The UAE has deposited around $2 billion in Pakistan to support external position. Pakistan was seeking rollover of debts extended by friendly countries as part of International Monetary Fund (IMF) conditions. The ADFD decision would bring relief to debt servicing, and the pressure on reserves would ease,” Muzamil Aslam, senior financial expert, told Arab News.
Explaining ADFD’s stand, its director general Mohammed Saif Al-Suwaidi said: “At a time when the world is reeling under the effect of the pandemic that has affected every area — from economy and society to health and education — it is imperative for us to support particularly those that need it most, especially the low-income countries. The initiative is so crucial to ensure their financial stability and that they steadily follow the path to growth and sustainable economic development.”
In a similar move to help the developing economies ride over the current crisis, the fund recently announced that it would contribute to a $10 billion support fund committed by institutions within the Arab Coordination Group. The package includes technical assistance, grants, concessional loans, financing, trade insurance and capacity development programs.