Italian conditions for 7.75 million euros loan utilisation refused

Pakistan has refused to accept the conditions of the Italian government for utilisation of 7.75 million euros loan given for the promotion of small and medium enterprises (SMEs), well-placed sources in the Finance Ministry told Business Recorder here on Thursday.
The sources said, the Italian government had extended the loan on zero percent interest rate for the promotion of SMEs in Pakistan, but the government relent the loan to the SMEs on an interest rate, which was acceptable to the lender.
"The Italian government showed reservations over the interest rate fixed by the government and proposed revision in relenting terms," the sources said, adding that later the high-ups made adjustments in the terms accordingly.
The sources said the loan agreement was signed between the two countries during the visit of Prime Minister Shaukat Aziz on July 14.
The Economic Affairs Division (EAD) took the matter to the Economic Co-ordination Committee (ECC) in its previous meeting, wherein it was pointed out that Article 5 of the agreement stipulates for acquiring/purchasing goods and services in Italy, while a maximum of 20 percent of the required financing may be utilised to cover local cost and or for importation of goods of non-Italian origin, the sources added.
"The ECC felt that our local small and medium enterprises require more assistance of an indigenous nature, consequently, it would be appropriate if the clause could be got suitably revised for purchase of machinery and services of Pakistani origin to the extent of 80 percent," the sources said.
They said the committee, while approving the proposal titled "relaxation in relenting terms of Italian soft loan of 7.75 million euros for the promotion of SMEs, directed that the EAD may take up the issue with the Italian government, proposing 80 percent utilisation of the loan for purchase of local machinery and services required for the promotion of SMEs.
The sources also said the case was being taken up with the concerned government for its early resolution.