Agreement reached on debt deferral

ISLAMABAD: The governments of Japan and Pakistan on Friday agreed on debt deferral amounting to US$200 million, as the second phase of “the G20 Debt Service Suspension Initiative (DSSI)”.

Prior to this, both Governments agreed on the first debt deferral amounting to approx. US$370 million on April 27, 2021 under the same initiative, said a press release issued here.

The total amount of deferred debt has reached approx. US$570 million, which will widen the fiscal space for the Government of Pakistan to restore its economy affected by the COVID-19 pandemic.

The concessional loans, subject to debt deferral, have been utilised for infrastructure development such as roads, tunnels, power plants and grids, irrigation, water supply, and drainage facilities in Pakistan from the early 1990s to the mid-2010s.

These concessional loans have favourable conditions for Pakistan in terms of low interest rate, as well as long grace and repayment period.

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Under the second agreement, repayments for the debt and interest due between January 1 and June 30, 2021 will be rescheduled after December 15, 2022.

In addition to the debt deferral, Japan has also extended a total of US$23.5 million in grants to Pakistan for supplementing its counter-COVID-19 measures as follows:

Feb 2020: Delivery of diagnostic kits,

From Apr-May 2020,disbursement of a total of $7.41 million to UNICEF, IOM, IFRC, UNHCR and UNOPS for providing hygiene items and alternative learning opportunities, and training health workers, etc.,

From December 2020: Grant Assistance of $9.5 million to NDMA for procuring medical equipment and in March 2021: Grant Assistance of $6.59 million to UNICEF for improving the vaccine cold-chain.

Ambassador of Japan to Pakistan, Matsuda Kuninori, who is about to be transferred to the Japanese Embassy in Ukraine after nearly three years of his tenure in Pakistan, said, “I am aware that Pakistan’s COVID-19 affected economy is on a solid recovery path, including the prospect of higher GDP growth.

Next year, Japan and Pakistan are going to celebrate the 70th anniversary of the establishment of diplomatic relations.

“I strongly hope that a new chapter will be carved in the history of our friendship on the basis of Japan’s development cooperation in the past decades.”