.

1- KESC PRIVATIZATION
2- KESC REDUCED SECURITY DEPOSIT RATE
3-
FAST GROWING MARKET OF TFCS
4- DEBT RESCHEDULING WITH JAPAN
5- PAKISTAN'S FOREX RESERVES
6- ESTABLISHMENT OF AN ECN?
7- NEW RULES FOR NBFC
8- SDK CHAINS REAL TIME PILLERS

.

DEBT RESCHEDULING AGREEMENT WITH JAPAN

It will be paid in equal semi-annual installments beginning from the year 2017

 

From SHAMIM AHMED RIZVI, Islamabad
Apr 07 - 13, 2003

 

 

Perhaps the biggest single country debt rescheduling agreement was signed in Islamabad last week with Japan under which the repayment period of about $4.5 (536 billion yen) has been extended to 38 years including a grace period of 15 years. It will be paid in equal semi-annual installments beginning from the year 2017. Originally this amount was to be paid back by 2007.

Japan loan constitutes 36 per cent of the total rescheduled Paris Club debts of $12.5 billion and is the largest among 18 Paris Club creditors countries. The Japanese loan consisted of three categories, i.e. debts of Japan Bank for International Co-operation (JBIC); commercial debts insured by the Government of Japan and food side debts.

The rescheduled debt constitutes: (i) JBIC Debts: Ex-OECF Yen Loans (466 billion yen) will be repaid in 38 years, including a grace period of 15 years and in 46 equal semi-annual installments beginning from May 31, 2017. The rate of interest would be 1.8 per cent.

(ii) Ex-JEXIM Yen Loans (16 billion yen) will be repaid in 38 years, including grace period of 15 years and in 46 semi-annual installments beginning from May 31, 2017. The rate of interest will applicable to six-month yen LIBOR+0.5 per cent per annum.

(iii) Ex-JEXIM United Loans (45 billion yen) will be repaid in 23 years, including a grace period of 5 years and in 36 semi-annual installments beginning from May 31, 2007. The rate of interest will applicable to six month Yen LIBOR+0.5 per cent per annum.

(iv) The

 

 

debt guaranteed by Ex-JEXIM (6 billion yen) will be repaid in 23 years, including a grace period of 5 years and in 36 installments beginning from May 31, 2007. The rate of interest will be applicable to six-month yen LIBOR+0.5 per cent per annum.

The rescheduled commercial debt (3 billion Yen) will be repaid in 23 years, including a grace period of 5 years and in 36 semi-annual installments beginning from May 31, 2007. The rate of interest will be applicable to five-year Japanese Government Board yield +0.5 per cent per annum.

Japan has provided an Official Development Assistance (ODA) loan totalling up to 3,149 billion yen ($ 27 million) to Pakistan for the third phase of the ongoing "Kohat Tunnel construction project" in April 2003.

Japan has also provided sets of economic assistance to help Pakistan in tackling the formidable domestic problems after September 11, 2001. On September 2001 an emergency aid comprising $ 40 million was announced. A grant of $300 million, which included the emergency aid package above, was announced for the next two years on November 16 to assist the Pakistani government for its poverty reduction programme.

This month Japan has provided 6 billion yen (approximately $50 million) as a non-project grant aid to Pakistan, which is a part of $300 million grant.

From the Paris Club creditors, Denmark and Commonwealth Development Corporation (CDS) of the UK have waived off their entire outstanding debt of $18.4 million and $29.5 million respectively, while, Netherlands has also given remission in debt services payment falling during October 2001 to December 2002 equivalent to $14.3 million and the total cancellation of debt, thus, comes to $62.2 million.

US has committed to write of $1 billion for which a draft agreement has been received and is expected to be signed soon. From the non-Paris Club creditors Saudi Arabia has provided grant assistance of $50 million in cash and refinancing arrangement instead of rescheduling of their outstanding debt under the Paris Club III.

Under the rescheduling Pakistan has been able to sign the agreement at reduced rates of interest for an extended period of repayment as compared to original rates of interest and repayment period. Thus estimated relief of $1.2 to 1.5 billion annually will accrue in payment of debt servicing on its external debt during the years 2001-02 to 2004-05.

 

 

Two remaining loans of Korea and Russia would also be finalised for rescheduling in April, while the final date was March 31. However, a broader agreement has been reached with them, while Korean loan still has some hitches. In case of Korea, a delegation has been discussing a $738 million Daewoo loan for rescheduling. The schemes for $120 million Russian loan rescheduling were also discussed in February.

Almost 92 per cent loans rescheduling under the Paris Club agreement has been completed. The Paris Club agreement was signed in December 2001. The rescheduling agreement signed so far included Austria $33.18 million, Belgium, $42.93 million, Canada $342.61 million, Denmark $16.49 million, Finland $6.06 million, France $1.061 million, Germany $1.146 million, Netherlands $89.56 million, Norway $49.51 million, Spain $75.63 million and Switzerland $68.38 million.

The Paris Club has also decided to defer for three years all the amortisation payments on post-cutoff date debts and interest on restructured loans due to be paid between November 30, 2001 and June, 30 2002. In addition, 20 per cent of the interest payments due in next two years was also deferred.

Out of the rescheduled debt nearly 50 per cent of this debt was due for payment by 2007. There were also individual creditors who showed their willingness to swap debt for social sector funding for up to $1.5 billion.