Japan, Pakistan agree on $160m debt deferral

Our Correspondent
Thursday, Sep 22, 2022

ISLAMABAD: Japan and Pakistan have officially agreed on debt deferral amounting to about $160 million as the last phase of the “G20 Debt Service Suspension Initiative (DSSI)”.

Japan on Wednesday said in an official statement that prior to this, both governments agreed on the first debt deferral amounting to approximately $370 million on April 27, 2021 and the second debt deferral amounting to approximately $200 million on October 22, 2021, under the same initiative. “The total amount of deferred debt has reached approximately $730 million, which will widen the fiscal space for the government of Pakistan to restore its economy affected by the Covid-19 pandemic and flood disaster,” the statement said.

The concessional loans, subject to debt deferral, have been utilised for infrastructure development such as roads, tunnels, power plants, 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 last agreement, repayments for the debt and interest due between July 1 and December 31, 2021 will be rescheduled after June 15, 2023. In addition to the debt deferral, the Government of Japan decided to extend Emergency Grant Aid of $7 million to Pakistan in response to damages caused by floods. This aid will allow implementing humanitarian assistance activities for those seriously affected by the flood disaster in different parts of Pakistan through multiple international organisations in areas such as food, shelter, non-food items, health and medical care as well as water and sanitation.

WADA Mitsuhiro, Ambassador of Japan to Pakistan, reaffirmed his commitment to support Pakistan. “I would like to assure that the government of Japan stands ready to support the people of Pakistan. Given the rapidly rising scale of needs, we consider it critical to extend our best support and stand available to the affected. As part of the ‘2022 Floods Response Plan’, we will extend our assistance, ensuring collective and coordinated actions to respond to the national emergency,” he said.

The government of Japan had already provided tents and plastic sheets as emergency relief goods through JICA, and these items were now being distributed among people in need, the statement concluded.