Pakistan and Italy have signed an agreement on Saturday in connection with debt-for-development swap. The agreement was signed by visiting Italian deputy foreign minister Gianni Vernetti and minister of state for economic affairs Hina Rabbani Khar.
The debt subject to swap operations under this agreement is of approximately $85 million, which is 50 percent of the total Italian debt (ODA amounting to around $160 million) that Pakistan owes to Italy.
In May 2006, Italy had already agreed to cancel/adjust first 50 percent of the debt towards the government of Pakistan expenditure up to $85 million incurred on Afghan refugees-related projects.
This portion of loan will stand cancelled by the end of 2008. The servicing of the whole Italian debt (ODA) has, however, been stopped from May 2006 as agreed upon by Italy.
As per the agreement signed on Saturday, the loan under the swap is proposed to be offset in five equal annual tranches (2009-2014) commencing from the formal cancellation of first 50 percent in 2008.
The payments eligible for swap operations will be made from budgetary resources of the government of Pakistan and shall be spent on jointly agreed social and development projects.
Online
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