The government of Pakistan and the government of Japan have signed debt suspension agreements worth $367 million under the G-20 Debt Service Suspension Initiative (Phase-I) to help counter the Covid19 pandemic.
This is in accordance 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, read 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 further read.
Owing to COVID-19, the G20 countries, along with the Paris Club creditors, announced a Debt Service Suspension Initiative (DSSI) to provide necessary fiscal space to stressed countries in order to meet their urgent economic and health needs.
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Taking advantage of this initiative, the government of Pakistan also entered into negotiations with 21 creditor countries for debt suspension worth $1.6 billion under DSSI Phase-I (April – December 2020).
According to details, the government of Pakistan would repay the suspended amount in 4-years starting January 2022.
These concessional loans have favorable conditions for Pakistan in terms of low interest rate, long grace and repayment period. These loans have been used 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.
“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,” said the Japanese envoy.
The Covid19 pandemic has had a devastating effect on the global economy. During this time, Japan has stood by Pakistan by providing it with direct support of $9.5 million and multilateral support of $7.41 million to curb the virus, along with quick delivery of diagnostic kits and non-governmental support, all of which were on a grant basis.