Downgrade fears will deter countries like Pakistan from joining G20 debt relief - World Bank

A person enters the building of the Washington-based global development lender, The World Bank Group, in Washington on January 17, 2019. (AFP)
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Updated 24 February 2021

Downgrade fears will deter countries like Pakistan from joining G20 debt relief - World Bank

  • In November, G20 launched a framework designed to help countries defer or negotiate down their debt as part of wider relief programme
  • The framework is open to more than 70 of the world’s poorest countries such as Pakistan, Mongolia, Cameroon or Angola

LONDON: Fears of credit rating downgrades will deter the world’s poorest countries, including Pakistan, from taking advantage of debt relief being offered under the G20 common framework, World Bank chief economist Carmen Reinhart said.
In November, the G20 group of major economies launched a framework designed to streamline a process to help countries defer or negotiate down their debt as part of a wider relief programme.
Ethiopia’s application in January to the programme - which foresees private creditor participation - prompted Fitch and S&P to slash its sovereign rating.
“Countries will weigh that in... especially those countries which are still hoping to access private capital, to tap capital markets,” Reinhart said in an interview. “The prospect of being downgraded is going to be a deterrent.”
Nonetheless, the longer the effects of the pandemic lasted the more countries would find themselves in debt distress and having to apply for relief anyway, she said.
Chad and Zambia have also applied for debt relief under the framework. Ethiopia’s dollar-denominated bonds have taken a beating since the country sought relief through the framework, pushing yields from below 6% in January to above 9% following the request.
The framework - which comes in addition to payment relief under the G20 Debt Service Suspension Initiative (DSSI) - is open to more than 70 of the world’s poorest countries such as Pakistan, Mongolia, Cameroon or Angola. Most of them are located in Africa or Asia, not all have international bonds outstanding.
Reinhart said she hoped those countries who applied to have debt treatment through the framework would see a meaningful reduction, though many underestimated the complexity of the different types of creditors involved.
“A common recurring pattern has been that there is some effort to reduce debt but often there is not enough, often countries have to go back to the drawing board to try to resolve problems again,” said Reinhart in the interview, part of the IEFA conversations series.
“I am hoping that the common framework will help achieve more meaningful debt reductions in the first round, but it will be a challenge.”
Meanwhile a new allocation of Special Drawing Rights (SDRs) - the International Monetary Fund’s own currency - could help much pressured government’s shore up their finances and help fund health and education systems badly hit by the pandemic, said Reinhart.
According to sources, the U.S., Germany and Italy all are open to backing new SDR issuance of $500 billion.
“Making the pie bigger does provide the additional fire power that is so lacking in many of these countries,” Reinhart said, adding she expected this could happen quickly.
“It is a very important step in the right direction.”


At tent classroom, teachers in flooded Pakistani valley race to keep kids at school

Updated 7 sec ago

At tent classroom, teachers in flooded Pakistani valley race to keep kids at school

  • Floods destroyed 3,000 schools in Balochistan, locking nearly 390,000 students out of the classroom
  • 400 children of Government Boys School in Hanna Urak are attending classes in makeshift tents

QUETTA: As they stood up when their white-bearded maths professor entered a tent on Teacher’s Day on Wednesday, students in flood devastated Urak valley showed their respect not only for his role in their education, but in getting them back to class. 

The sole Government Boys School in Hanna Urak, some 40 km Quetta, the provincial capital of Balochistan, was destroyed when the floods, caused by abnormal monsoon rains and glacial melt, have submerged huge swathes of the South Asian country since mid-June. 

The southwestern province was one of the worst hit by the deadly floods, which destroyed homes and more than 3,000 schools, locking nearly 390,000 students out of the classroom. 

In Urak, children could not return to their damaged school when floodwaters subsided. And as the building is no longer usable, many parents gave up on their education, asking them to help rebuild their ruined households instead. 

As concerns are already rising of a lost generation of Pakistani children, who again are unable to reach the classroom after already missing out on schooling during the coronavirus pandemic, the maths teacher, Abdul Aleem, reached out to their parents to allow them to attend classes in tents. 

“I believe education in bad circumstances is better than stopping the children from school,” he told Arab News. 

“We have met the parents and students to convince them to education, and resumed the classes.” 

As most of the parents have agreed and classes resumed last month, Aleem who has been teaching for the past four decades, said it kept his “hopes alive for the educational future of our country.” 

Nadeem Shair Tareen, the school’s principle said he knows that it is hard now for the students and was doing his best to make sure they do not drop out. 

The children know it and they appreciate the efforts. 

“The teachers in this school are concerned about the students,” Sohail Khan, a Grade 10 student, one of the school's 400 pupils, told Arab News. 

“Despite the lack of classrooms, we have been getting an education.” 


During army chief’s US visit, Islamabad and Washington agree to improve ties through trade, investment

Updated 05 October 2022

During army chief’s US visit, Islamabad and Washington agree to improve ties through trade, investment

  • General Qamar Javed Bajwa is in US on a week-long visit to discuss bilateral ties and regional security
  • Washington has over the years worked closely with Pakistani army chiefs alongside civilian governments

ISLAMABAD: Pakistan army chief General Qamar Javed Bajwa met top US military and security officials during a week-long visit to Washington, with both sides agreeing on the need to boost bilateral ties by improving economic cooperation, trade and investment.

Washington has over the years worked closely with Pakistani army chiefs alongside civilian governments.

On Tuesday, Gen Bajwa called on US defense secretary General Lloyd James Austin III (Retired), national security adviser Jacob Jeremiah Sullivan, and deputy secretary of state Wendy Ruth Sherman.

“Both sides agreed that Pakistan-US have long history of bilateral cooperation and shall continue improving through economic ties, trade and investment,” the Pakistan army’s media wing said in a statement.

“Both sides had convergence on major international issues including Afghanistan and need for cooperation to avoid humanitarian crisis and improving peace and stability in the region.”

The army chief thanked the US for its assistance in the aftermath of recent floods and condoled over death and devastation in a hurricane in Florida.

Last month, Pentagon announced the US State Department had approved the potential sale of F-16 aircraft sustainment and related equipment to Pakistan in a deal valued at up to $450 million. The State Department subsequently said the equipment would sustain Pakistan’s “capability to meet current and future counterterrorism threats.”

The US-built F-16 aircraft are a critical part of the military arsenal of Pakistan, whose arch-rival India worries that the fleet could be used against it by its neighbor.

Officially for years allies in fighting terrorism, Pakistan and the United States have had a complicated relationship, bound by Washington’s dependence on Pakistan to supply its troops in Afghanistan but plagued by accusations Islamabad was playing a double game.

Tensions grew that militants that targetted American troops in Afghanistan were long allowed to shelter on Pakistani soil. Islamabad denies this.


Investment, climate cooperation with US key to reducing Pakistan’s growing reliance on China — study

Updated 05 October 2022

Investment, climate cooperation with US key to reducing Pakistan’s growing reliance on China — study

  • Study group released its findings during a visit to Washington by the head of Pakistan’s powerful military
  • Says US must move beyond leveraging aid to change Pakistan’s policies, a tactic that has been a proven failure

WASHINGTON: The United States needs to keep engaging Pakistan despite lingering distrust over Afghanistan, with investment and climate cooperation key to reducing the South Asian nation’s growing reliance on China, a study group recommended Tuesday.

The group released its findings during a visit to Washington by the head of Pakistan’s powerful military, General Qamar Javed Bajwa, a week after a trip by the civilian foreign minister, Bilawal Bhutto Zardari.

The study group, which did not involve the US government, included scholars and former US ambassadors to Pakistan Ryan Crocker, Cameron Munter and Robin Raphel, along with Husain Haqqani, Pakistan’s former ambassador in Washington.

Pakistan and the United States were partners in the Cold War and, officially, in the Afghanistan war. But American officials lost patience with Islamabad which they suspected of quietly maintaining support for the Taliban, who triumphed as US troops withdrew last year.

“Instead of allowing existing differences to define the partnership, it may be time to recognize that both sides need to understand the other’s interests so that they can then find a way to work on areas of mutual concern,” the study group said.

The United States must move beyond leveraging aid to change Pakistan’s policies, a tactic that has been a proven failure.

Islamabad, in turn, needs to accept “that all of Pakistan’s problems, especially terrorism and militancy, cannot be laid at the door of the US.”

Pakistan has forged increasingly close relations with China, triggering warnings from the United States that Beijing — seen as Washington’s key global competitor — will saddle the economically troubled nation with debt.

The study group said that after previously linking the Pakistan relationship to Afghanistan or its historic rival India, the United States should avoid now seeing ties through the lens of China.

Instead, the United States can “help build Pakistan’s capacity for transparency and compliance” on Chinese loans and can reduce reliance on China by encouraging investment by US companies and others, it said.

The United States can also focus on building climate resilience — a key challenge for Pakistan, which was recently devastated by floods.

While the United States wants to step back from Afghanistan, the study group said the need for counterterrorism cooperation with Pakistan “has if anything increased” due to the loss of US intelligence assets on the ground.

“While Pakistan and the US often fail to see eye-to-eye when it comes to Afghanistan, China, or India, they do share mutual interests in seeking stability in the region, combatting the problem of extremism and averting armed conflict in nuclear South Asia,” it said.


Two Pakistani soldiers, 7 militants killed in shootouts 

Updated 04 October 2022

Two Pakistani soldiers, 7 militants killed in shootouts 

  • First firefight happened near Peshawar, capital of Khyber Pakhtunkhwa province
  • Separately, troops killed four militants in northwestern town of Tank in overnight raid

PESHAWAR: Militants with small arms attacked a convoy of Pakistani security forces near the northwest border with Afghanistan, triggering an intense shootout that killed two soldiers and three insurgents, the military said Tuesday.
The firefight happened near Peshawar, the capital of Khyber Pakhtunkhwa province. The military provided no further details and the identities of the slain insurgents were not known.
No group immediately claimed responsibility for the attack.
Separately, in an overnight raid, troops killed four militants in Tank, a northwestern town that also borders Afghanistan, the military said. It provided no further details.
Mohammad Khurasani, a spokesperson for the Pakistani Taliban, said the four men killed in Tank were their “holy warriors.” In a statement, he said such military raids indicate that the government and its institutions do not want peace in Pakistan.
The Pakistani Taliban are a separate group but are allies of the Afghan Taliban, who seized power in Afghanistan more than a year ago as the US and NATO troops were in the final stages of their pullout.
The Taliban takeover in Afghanistan has emboldened the Pakistani Taliban, who are known as Tehreek-e-Taliban Pakistan, or TTP. 
A monthslong cease-fire between the TTP and Pakistan is intact.
Although the Taliban in Afghanistan have encouraged Islamabad and the TTP to reach a peace agreement, talks between the two sides that started in May have not had results.
 


Pakistani chief justice calls constitutional article on disqualification of MPs a ‘draconian’ law

Updated 04 October 2022

Pakistani chief justice calls constitutional article on disqualification of MPs a ‘draconian’ law

  • Article 62(1)(f) has been used to end the terms of sitting heads of government and top politicians
  • In 2017, three-time Prime Minister Nawaz Sharif was removed from office under Article 62(1)(f)

ISLAMABAD: Pakistani Chief Justice Umer Ata Bandial on Tuesday said Article 62(1)(f), which pertains to the disqualification from politics of members of parliament, was a “draconian” law, calling into question a legal provision that has been used in the past to end the careers of sitting heads of government and top politicians.

In 2017, three-time Prime Minister Nawaz Sharif was removed from office by the Supreme Court for not being “honest” or “truthful,” otherwise known as “ameen” and “sadiq,” respectively in Article 62(1)(f).

On Tuesday, while a hearing a petition filed by opposition politician Faisal Vawda against a lifetime ban from politics in a case pertaining to the submission of a false affidavit in election papers, the chief justice said: 

“Article 62 (1)(f) is a draconian law and we will hear this case with caution and in detail.” 

In April 2018, the Supreme Court of Pakistan had ruled that lawmakers disqualified under Article 62(1)(f) would be unable to contest elections for the rest of their lives.

The apex court said the disqualification would hold until the court declaration disqualifying the lawmaker stood. The judges also unanimously ruled that the Constitution states that those not ‘honest’ and ‘truthful’ as per the law were banned from parliament for life.

Opposition politician Jahangir Tarin was also disqualified for life under Article 62(1)(f) in 2017.