Pakistan and USA have signed a 495.3 million dollars Debt Cancellation Agreement which left the total USA debt against Pakistan to $1.5 billion. For this cancellation, US government had allocated 200 million dollars, which would become equal to $495.3 million by the date of maturity of this loan.
US Ambassador Nancy Powell and Secretary Economic Affairs Division Dr Waqar Masood signed the documents. Powell said that though a lot has been achieved and macro-economy has been strengthened but the challenges remain including a big challenge of reducing poverty.
USA would give Pakistan 701 million dollars during the next 2004-05 USA fiscal year starting from coming October. It constitutes $ 600 million from $ 3 billion package announced at Camp David by President Bush. Rest of 100 million dollars would be from USAID social sector assistance, in addition to the 3 billion dollar package. A request for approval of this package has already been sent to Congress by US President.
Over the next five years, of which at least $200 million for five years would make total up to 1 billion dollars will be earmarked for macroeconomic stability and investment in human capital and private sector development. Further more, 100 million dollars for each year for five years totalling 500 million dollars would be given by USAID program to improve education, health program and good governance.
"Our continued commitment to Pakistan is a vote of confidence in the economic stewardship of the Pakistani government and the intelligence, energy and resourcefulness of the Pakistani people," the Ambassador said.
"The final instalment of the debt cancellation marks an evolutionary transition from stabilisation assistance to participation in Pakistan's economic take-off and sustained development," she said.
Total USA debt to Pakistan was 2.9 billion dollars near about Sep 11 2001. Later on USA provided Pakistan with $600 million cash grant in November 2001, rescheduled entire stock of debt in August 2002 and wrote off one billion dollars in 2003.