The governments of Pakistan and Japan have agreed on debt deferral amounting to approximately US$200 million as the second phase of “the G20 Debt Service Suspension Initiative (DSSI)”.
According to a statement issued on Friday, both governments earlier agreed on the first debt deferral amounting to approximately US$370 million on April 27, 2021, under the same initiative.
The total amount of deferred debt has now reached approximately $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.
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.
Talking about the development, Japanese Ambassador Matsuda Kuninori said that he is aware that Pakistan’s Covid-19 affected economy is on a solid recovery path, including the prospect of higher GDP growth.
He said that Japan and Pakistan are going to celebrate the 70th anniversary of the establishment of diplomatic relations next year. “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,” he added.—TLTP
