Pakistan, Japan sign $367m debt relief pacts

Relief comes under phase-I of G20 Debt Service Suspension Initiative

ISLAMABAD:

Pakistan and Japan on Tuesday signed debt suspension agreements worth $367 million under phase-1 of the G20 Debt Service Suspension Initiative (DSSI).

Economic Affairs Division Secretary Noor Ahmed and Japanese Ambassador to Pakistan Kuninori Matsuda signed the agreements in Islamabad.

In the wake of Covid-19, the G20 countries, together with the Paris Club creditors, had announced debt service suspension to provide much-needed fiscal space to the stressed countries to help them meet urgent economic and health needs. The government of Pakistan, taking advantage of the initiative, entered into negotiations with 21 creditor countries for debt suspension amounting to $1.6 billion under the DSSI phase-1 (April-December 2020). The government will repay the suspended amount in four years starting January 2022.

Speaking on the occasion, Ahmed appreciated the debt suspension facility provided by the Japanese government. He highlighted that Japan was the second largest bilateral lender to Pakistan. The EAD secretary acknowledged the continued support of Japan for healthcare, education, agriculture, infrastructure, disaster management and urban services including water supply, sanitation and waste management.

The Japanese envoy reaffirmed Tokyo’s support to Pakistan on issues of mutual interest. “Japanese economic assistance has played and shall continue to play a vital role in the socio-economic uplift of Pakistan,” he stated. The $367 million relief is only under the first phase. G20 has extended its initiative to three phases, which will take Japan’s contribution to around $800 million.

The global debt payment suspension initiative has provided temporary relief of around $3.5 billion to Pakistan under three phases and one-third of the relief has come from China, reducing the immediate borrowing requirement by the same amount. Under the third phase (July-December 2021) of the DSSI, Pakistan will get around $1 billion relief.

Published in The Express Tribune, April 28^th, 2021.

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