Pak Agrees to Join ‘Board of Peace’ after Seeking $2.5-bn Debt’s Rollover for Ailing Economy
In a significant development, Pakistan has announced its decision to join the ‘Board of Peace’, an initiative led by former US President Donald Trump, in support of the Gaza Peace Plan. This move comes at a time when the country is struggling to stabilize its ailing economy, with a heavy debt burden and dwindling foreign exchange reserves. Just days ago, Pakistan approached the United Arab Emirates (UAE) with a request to rollover a $2.5-billion maturing debt and to halve the applicable interest rate.
The decision to join the ‘Board of Peace’ was announced by Pakistan’s Foreign Minister, Ishaq Dar, who stated that the country is committed to supporting the Gaza Peace Plan and promoting peace and stability in the region. The ‘Board of Peace’ is a high-profile initiative aimed at promoting peace and reconciliation in the Middle East, with a focus on resolving the long-standing Israeli-Palestinian conflict.
However, the decision to join the ‘Board of Peace’ has raised eyebrows, given the significant financial implications involved. According to reports, the board requires a $1-billion fee to join as a permanent member, a hefty sum that Pakistan can ill afford at this time. The country is already struggling to meet its debt obligations, with a total debt burden of over $100 billion.
The request to the UAE to rollover the $2.5-billion maturing debt is a clear indication of the dire state of Pakistan’s economy. The country has been facing a severe balance of payments crisis, with its foreign exchange reserves dwindling to alarmingly low levels. The government has been scrambling to secure foreign loans and grants to shore up its reserves and avoid a default on its debt obligations.
The UAE has been a key player in helping Pakistan to stabilize its economy, with the country providing significant financial support in recent years. In 2022, the UAE deposited $2 billion in Pakistan’s central bank to help boost its foreign exchange reserves. The country has also provided oil on deferred payment to Pakistan, helping to reduce its oil import bill.
Despite these efforts, Pakistan’s economy remains in a precarious state. The country is facing a significant fiscal deficit, with a budget shortfall of over 7% of GDP. The government has been forced to implement austerity measures, including a sharp increase in taxes and a reduction in public spending. However, these measures have had a negative impact on economic growth, with the country’s GDP growth rate slowing to just 2% in 2022.
The decision to join the ‘Board of Peace’ has been criticized by some as a luxury that Pakistan can ill afford. The $1-billion fee to join the board is a significant sum that could be better spent on addressing the country’s pressing economic challenges. Additionally, some have questioned the value of joining the board, given the lack of clarity on its objectives and the potential benefits to Pakistan.
However, supporters of the decision argue that joining the ‘Board of Peace’ could have significant strategic benefits for Pakistan. The country has long been a key player in regional politics, and its participation in the board could help to promote its interests and influence in the region. Additionally, the board’s focus on promoting peace and stability in the Middle East could have positive spillover effects for Pakistan, which has long been affected by regional conflicts.
In conclusion, Pakistan’s decision to join the ‘Board of Peace’ is a significant development that reflects the country’s commitment to promoting peace and stability in the region. However, the decision has raised questions about the country’s priorities, given its pressing economic challenges. As Pakistan navigates its way through these challenging times, it will be important to carefully consider the implications of its decisions and to prioritize its spending on initiatives that will have the greatest impact on its economic stability and growth.
Source: https://www.reuters.com/world/asia-pacific/pakistan-join-trumps-board-peace-gaza-2026-01-21/
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