Islamabad, 22 September 2022 (TDI): As the final step of “the G20 Debt Service Suspension Initiative (DSSI),” the governments of Japan and Pakistan reached an agreement on a debt deferral of around US$160 million.
Prior to this, both Governments agreed to two debt deferrals under the same initiative: the first, for about US$370 million, on April 27, 2021, and the second, for approximately US$200 million, on October 22, 2021.
The Government of Pakistan will have more budgetary room to rebuild its economy after it was damaged by the COVID-19 epidemic and the flood calamity because the total amount of deferred debt has reached approximately US$730 million.
Between the early 1990s and the middle of 2010, Pakistan built highways, tunnels, power plants and grids, irrigation systems, water supply systems, and drainage facilities using concessional loans, which are susceptible to debt deferment.
Low-interest rates, a protracted grace period, & favorable terms for Pakistan are all features of these concessional loans.
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The latest agreement provides that beyond June 15, 2023, payments for the debt & interest due between July 1 & December 31, 2021, shall be postponed.
The Government of Japan also decided to grant Pakistan an emergency grant aid of USD 7 million in response to the devastation brought on by the flood disaster that has been occurring in Pakistan since mid-June. This is in addition to the debt deferral.
Through a number of international organizations, this Emergency Grand Aid will enable the implementation of humanitarian assistance programmes for those severely affected by the flood disaster in various parts of Pakistan in the areas of food, shelter, and non-food items, health and medical care, as well as water and sanitation.
Given the rapidly rising scale of needs, we consider it critical to extend our best support and stand available to the affected. As part of the “2022 Floods Response Plan”, we will extend our assistance, ensuring collective and coordinated actions to respond to the national emergency”.
The Government of Japan has already provided tents and plastic sheets as emergency relief goods through JICA, and these items are now being distributed to people in need.
The Ambassador of Japan to Pakistan, Mitsuhiro Wada also said that “I would like to stress that the Government of Japan is ready to support the people of Pakistan.”
