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Flood-hit Pakistan should suspend debt repayments, UN document says

Flood-hit Pakistan should suspend debt repayments, says UN paper - FT © Reuters. FILE PHOTO: A flood-displaced man wades to fill a tank after the rainy season and floods in Sehwan, Pakistan, September 20, 2022. REUTERS/Stringer/File Photo

(Reuters NEW YORK (Reuters) – Pakistan should suspend international debt repayments and restructure loans The Financial Times reported on Friday, citing a U.N. policy memo, as recent floods exacerbated the country’s post-financial crisis creditors.

The United Nations Development Programme will share the memo with the Pakistani government this week that the country’s creditors should consider debt relief so that policymakers can prioritize the Fund the disaster instead of repaying the loan.

The country’s foreign ministry, Islamabad, did not respond to a Reuters request for comment on the memo. Pakistan’s finance and information ministers could not be immediately reached for comment.

Pakistan earlier estimated the damage at $30 billion, with both the government and UN Secretary-General António Guterres blaming climate change for the floods.

The Financial Times said the memorandum further proposed a debt restructuring or swap where creditors would forgo repayments in exchange for Pakistan agreeing to invest in infrastructure to combat climate change.

Floods have affected 33 million Pakistanis, causing billions of dollars in damage and killing more than 1,500 – raising fears that Pakistan will not be able to pay its debts.

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