Islamabad, 11 August 2022 (TDI): The Ambassador of Denmark to Pakistan, Lis Rosenholm, and Muhammad Humair Karim, Secretary, Ministry of Economic Affairs of Pakistan, signed an Inter-Governmental Framework Agreement between the Governments of Pakistan and Denmark.

Pakistan and the Government of Denmark have signed the Agreement for interest-free loans in the sector of renewable energy, energy efficiency, water supply, and wastewater treatment sectors.

Lis Rosenholm, also met with the Minister of Economic Affairs, Sardar Ayaz Sadiq, in his office. Sardar Ayaz Sadiq informed the Ambassador that Pakistan and Denmark have a friendly and cordial relationship that has a lot of potential to improve.

Ayaz Sadiq also stated that the efforts to revive bilateral economic and development cooperation between the two countries paid off.

Denmark agreed to provide on-budget support to the Government of Pakistan through this Inter-Governmental Framework Agreement, and the emphasis on Waste Water Treatment Projects in Faisalabad and Lahore is greatly appreciated.

Purpose of Agreement

This agreement marks a watershed moment in Pakistan-Denmark relations. The two countries have been partners in successful development cooperation since 1969. But,  Denmark has not provided active on-budget financial assistance since 2017.

In addition, this Framework Agreement would serve as an umbrella agreement for potential development sector projects emanating from it, primarily in renewable energy, and energy efficiency.

The Danish side offers the Danida Sustainable Infrastructure Finance (DSIF) Facility, which would provide interest-free but tied loans up to but not limited to € 100 million and would also facilitate the transfer of technology and know-how from Denmark to Pakistan.

Moreover, after signing this framework agreement, the interest-free loans will have a 35% concessional element covering the loan interest, export premium, bank margin, and an upfront grant if these expenses do not total 35% of the contract amount.

The Secretary Economic Affairs Division thanked the Danish Ambassador to Pakistan and the Danish International Development Agency (DANIDA), and the Danish Government for their assistance to Pakistan.