Pakistan gets debt relief of $370m from Japan

The relief has been provided under G20 debt suspension initiative to help fight Covid-19, says official statement

Tokyo and Islamabad agreed on debt deferral amounting to Japanese yen 40 billion (approximately $370 million) for making fiscal space to fight against Covid-19 in Pakistan.

This is in line with the G20 Debt Service Suspension Initiative (DSSI) agreed on April 15, 2020 and the memorandum of understanding (MoU) signed between Pakistan and the creditor countries on June 9, 2020, according to an official statement issued by the Japanese embassy on Tuesday.

“Notes to this effect were signed and exchanged between Ambassador of Japan to Pakistan Matsuda Kuninori and Secretary of the Ministry of Economic Affairs Noor Ahmed in Islamabad on April 27, 2021,” it added.

The concessional loans, which are subject to the debt deferral, have been utilised for infrastructure development such as roads, tunnels, power plants and grids, irrigation, water supply, 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, long grace and repayment period. “After the stability of Afghanistan is realised, I believe some of these projects must be a part of the connectivity between Pakistan, Afghanistan and Central Asia,” the statement quoted the Japanese envoy as saying.

Under this agreement, repayments for the debt and interest due between May 1, 2020 and December 31, 2020 will be rescheduled after June 15, 2022.

Economic shock caused by the outbreak of Covid-19 has continued on a global scale. Japan provided Pakistan with direct support of $9.5 million and multilateral support of $7.41 million to contain Covid-19, as well as the quick delivery of diagnostic kits and non-governmental support, all of which were on a grant basis.

International solidarity on the medical and economical front is necessary to fight against infectious diseases with no borders.

Ambassador Matsuda said, “This agreement, which we signed today, represents Japan’s solidarity with Pakistan on the economic front.”