KARACHI: Pakistan is all set to sign agreements with Germany, Italy, Canada and the United Kingdom on June 5 for “millions of dollars” in debt relief in exchange for investments in environmental conservation efforts across the country, a climate change minister said.
The South Asian nation is working with lender countries on a debt-for-nature (DFN) swap program, which would see debt relief in return for binding commitments to achieve conservation targets, with lender countries agreeing to reduce Pakistan’s outstanding payments and channeling the money into conservation and climate-related expenses instead.
A state minister for climate said the signing of the DFN agreement was part of a lineup of events for World Environment Day on June 5, which Pakistan will be hosting for the first time.
“The Memoranda of Understanding (MoUs) under the debt-for-nature program will be signed on June 5,” Zartaj Gul, state minister for climate change, told Arab News, saying Pakistan had assured creditors of its commitment to combat climate change in exchange for “the amount of loans they will forgive.”
“We will not pay back the debts, but against that part of the loan, we will make progress on the restoration of the natural environment, whether it will be biodiversity conservation or restoration, or be it green jobs,” Gul added.
Gul said the exact amount for the DFN agreement would be determined “after the final ratification of the agreement by the respective governments.”
Pakistan owes nearly $11.54 billion to the Paris Club of country lenders, including $1.42 billion to Germany, $175 million to Italy, $5 million to the UK, and $403 million to Canada.
According to an April 2021 report by the International Monetary Fund (IMF), Pakistan has repaid around $40 million to Canada and Germany and is scheduled to pay an additional $29 million to both countries during the current fiscal year.
“These are longstanding and non-payable loans under the current circumstances,” Gul said, adding: “Nature-based solutions in exchange for debt relief will not only reduce Pakistan’s debt burden but will also benefit the environment in the country and the region as a whole.”
Gul said Pakistan had qualified for the DFN deal based on its “three-year performance” in conservation efforts, including the prestigious 10 Billion Tree Tsunami program launched by Prime Minister Imran Khan in 2018 which aims to counter extreme weather conditions in Pakistan that scientists link to climate change.
“During the last three years, we have shown performance through the Billion Tree Tsunami, Clean Green Pakistan, plastic bag ban, recharge Pakistan, ecosystem restoration, and [by] setting up 23 national parks,” Gul said, naming various climate initiatives taken by the government.
