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 $12.5 billion and is the largest among
18 Paris Club creditors countries. The Japanese loan consisted of three
categories, i.e. debts of Japan Bank for International Co-operation (JBIC);
commercial debts insured by the Government of Japan and food side debts.
The rescheduled debt constitutes:
JBIC Debts: Ex-OECF Yen Loans (466 billion yen) will be repaid in 38
years, including a grace period of 15 years and in 46 equal semi-annual
installments beginning from May 31, 2017. The rate of interest would be
1.8 per cent.
Ex-JEXIM Yen Loans (16 billion yen) will be repaid in 38 years,
including grace period of 15 years and in 46 semi-annual installments
beginning from May 31, 2017. The rate of interest will applicable to
six-month yen LIBOR+0.5 per cent per annum.
Ex-JEXIM United Loans (45 billion yen) will be repaid in 23 years,
including a grace period of 5 years and in 36 semi-annual installments
beginning from May 31, 2007. The rate of interest will applicable to six
month Yen LIBOR+0.5 per cent per annum.
debt guaranteed by Ex-JEXIM (6 billion yen) will be repaid in 23 years,
including a grace period of 5 years and in 36 installments beginning
from May 31, 2007. The rate of interest will be applicable to six-month
yen LIBOR+0.5 per cent per annum.
The rescheduled commercial debt (3 billion Yen) will
be repaid in 23 years, including a grace period of 5 years and in 36
semi-annual installments beginning from May 31, 2007. The rate of
interest will be applicable to five-year Japanese Government Board yield
+0.5 per cent per annum.
Japan has provided an Official Development Assistance
(ODA) loan totalling up to 3,149 billion yen ($ 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
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
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.