The coronavirus hit Pakistan in the worst possible way. The country saw itself struggling not only with the economy but also with social services, especially public health. This was thanks to the global realisation that a collective fight is the only way forward against the virus. In this regard, the international financial institutions’ decision to initiate the COVID-19 Debt Service Suspension Initiative (DSSI) endorsed by G-20 and the Paris Club was a much-needed step to save countries like Pakistan from a complete collapse. Under the (DSSI), a portion of Pakistan’s debt can be suspended; 2.4 billion dollars—the second-largest amount put on hold.

However, the carrot comes with a stick. The countries eligible for the debt service suspension have to focus on social/health and economic expenditure and development. The conditionality clause will closely monitor the situation of public health and social services in the states that requested for the suspension of debt. The deferral of payments will augment the government’s efforts to mitigate the direct and indirect impacts of the COVID-19 pandemic.

Still, amid the crisis, the move is a welcome one as Pakistan can focus on fighting the pandemic while nurturing a worsening economy. The government will find some breathing space with the postponement of the principal payments and interest payments. That said, the government needs to keep this fact in mind, like last time, the payments are postponed and not altogether cancelled.

Also, given that the deal is also in effect only until the end of this year, the benefits that Pakistan can accrue from the relaxation will be minimal. Therefore, how much good it does to the country is still a debatable subject. As suggested earlier in this paper, developed countries must introduce a package along the lines of the Marshall Plan to save developing countries from complete collapse. The time-bound suspension while direly needed is not an adequate response to the devastations that COVID-19 has caused and is still causing in the developing countries.