20000310

Debt rescheduling Pakistan, Japan reach accord on interest rates

ISLAMABAD: Pakistan and Japan have resolved the issues of interest rates on rescheduled debt worth over $800 million, paving the way for inking debt relief pact.

Official sources told APP here on Thursday, "negotiation regarding fixation of interest rates on rescheduled loan has been finalised between the two countries."

With the settlement of issues regarding interest rates, the source expressed the hope that the rescheduling accord between Pakistan and Japan could be signed any time.

The agreement has to come from Japan, sources continued maintaining, on receipt of the agreement it would be sent to law division for further vetting.

Debt relief accord valuing over $800 million will be signed between Pakistan and Japan before April 30 as there was now no pending issues in this regard, sources said.

To a question, the sources said that Pakistan government requested the Paris Club in black and white on February 29 for extension in the deadline till April 30 for inking debt relief pacts with the rest of the two countries.

The Club, sources stated will decide for an extension in the deadline and convey to Pakistan subsequently, adding it had already explained to the Club that Pakistan was not at fault for the expiry of deadline.

The Paris Club will convene special meeting of the representatives of the creditors' countries or will take decision for an extension in the deadline for Pakistan at its scheduled meeting.

Pakistan has so far got signed agreements with sixteen out of 18 countries worth over $2 billion. The countries are Japan and Switzerland.

Responding to another question, the sources said that negotiations are under way with six non-Paris Club member countries including Czech, UAE, Kuwait, Saudi Arabia and Libya for signing rescheduling agreements worth $350 million.

ODA loans available on concessional rates ranging between zero to 2 percent on average have been rescheduled for 20 years including 10 years grace period.

While non-ODA debt secured on market rate (Libor plus 0.5 percent) have been rescheduled with 15 years repayment period, commencing from 2003.

Of total debt agreed to be rescheduled in January 99 worth $3.3 billion. ODA broadly constituted 2/3 and non-ODA 1/3 of the loan.

Non-Paris Club member states are being convinced to sign debt relief accords on bilateral basis and similar terms and conditions agreed with Paris Club member countries, sources said. APP