KARACHI: Pakistan is to sign four debt relief agreements with Germany, Italy, Canada and the UK in exchange for investments in environmental conservation efforts.
“The memoranda of understanding under the debt-for-nature (DFN) program will be signed on June 5,” Zartaj Gul, state minister for climate change, told Arab News on Sunday.
According to the UN Development Programme (UNDP), under a DFN agreement the lender country agrees to reduce the debtor’s outstanding payments by channeling the money into conservation and climate-related expenses instead.
Gul said that, during the negotiations process, Pakistan assured creditors of its commitment to combat climate change in exchange for “the amount of loans they will forgive.”
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 report from the International Monetary Fund, Pakistan has repaid around $40 million to Canada and Germany. It is scheduled to pay an additional $29 million to both countries during the current fiscal year.
“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 be biodiversity conservation or restoration, or be it green jobs,” Gul added.
She explained that the signing of the DFN agreement was part of the event lineup for World Environment Day on June 5, which Pakistan is hosting for the first time.
“Pakistan will seek to highlight environmental issues and showcase the country’s initiatives and its role in global efforts,” Gul said, adding that the country qualified for the DFN deal based on its performance in conservation efforts, including the 10 Billion Tree Tsunami program.
The five-year tree-planting initiative, launched by Prime Minister Imran Khan in 2018, aims to counter extreme weather conditions that scientists link to climate change.
“Our portfolio is very strong as we have done work for the conservation of nature in Pakistan, and it shows our commitment to combat climate change. Pakistan’s efforts are globally recognized. 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 setting up 23 national parks.”
Helping Gul’s office with the DFN initiative is Pakistan’s Economic Affairs Division, which is working with the UK, Italy, Germany and Canada who have “shown a willingness” to sign the agreement.
In comments to reporters last week, Climate Change Minister Malik Amin Aslam confirmed the four countries’ expression of interest.
“We are hoping to give the good news to the world and Pakistanis that Pakistan is progressing with some countries on the DFN (deal),” Gul said.
Though the exact amount for the agreement remains unknown, Gul said it would be determined after the final ratification of the agreement by the governments.
“These are long-standing and non-payable loans under the current circumstances. 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.”