The governments of Japan and Pakistan agreed on debt deferral amounting to approximately $160 million, as the last phase of “the G20 Debt Service Suspension Initiative (DSSI)”.
Prior to this, both Governments agreed on the first debt deferral amounting to approx. US$370 million on April 27, 2021 and the second debt deferral amounting to approx. US$200 million on October 22, 2021, under the same initiative, a press release issued by the embassy of Japan issued here on Wednesday said. The total amount of deferred debt has reached approx. US$730 million, which will widen the fiscal space for the Government of Pakistan to restore its economy affected by the COVID-19 pandemic and the flood disaster.
The concessional loans, subject to debt deferral, have been utilized for infrastructure development such as roads, tunnels, power plants and grids, irrigation, water supply, and drainage facilities in Pakistan from the early 1990s to the mid-2010s. These concessional loans have favorable conditions for Pakistan in terms of low interest rate, as well as long grace and repayment period. Under the last agreement, repayments for the debt and interest due between July 1 and December 31, 2021 will be rescheduled after June 15, 2023, the press release said.
In addition to the debt deferral, the government of Japan decided to extend Emergency Grant Aid of $7 million to Pakistan in response to the damages caused by the flood disaster that have occurred in Pakistan since mid-June.