ISLAMABAD: The governments of Japan has agreed on debt deferral amounting to $200 million for Pakistan as part of the second phase of the G20 Debt Service Suspension Initiative (DSSI).
Pakistan and Japan had earlier agreed on the first debt deferral amounting to approximately $370 million on April 27, 2021, under the same initiative.
The total amount of deferred debt has reached approx. $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 rates, 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 $23.5 million in grants to Pakistan for supplementing its counter-COVID-19 measures including the delivery of diagnostic kits in February 2020.
From April-May 2020, the Japanese government disbursed a total of $7.41 million to UNICEF, IOM, IFRC, UNHCR and UNOPS for providing hygiene items and alternative learning opportunities, and training health workers.
In December 2020, Japan provided grant assistance of $9.5 million to NDMA for procuring medical equipment and in March 2021, it provided rant Assistance of $6.59 million to UNICEF for improving the vaccine cold chain.
Ambassador of Japan to Pakistan, Mastuda Kuninori, who is about to be transferred to the Japanese Embassy in Ukraine after nearly three years of his tenure in Pakistan, said, “I am aware that Pakistan’s COVID-19 affected economy is on a solid recovery path, including the prospect of higher GDP growth.
Japan and Pakistan will 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.”