TOKYO, Nov 14: Japan decided on Wednesday to provide fresh aid worth $300 million to Pakistan in light of Islamabad’s contribution to the war on terrorism, reports said.

Japan plans to offer the grant aid to Pakistan over the next two years in addition to the $40 million grant pledged in September, Jiji Press and Kyodo News agencies said, quoting government sources.

The government is likely to announce the assistance on Friday, Jiji Press said.

Tokyo believes the additional aid is necessary given lingering concerns about the political instability of Pakistan, which has been hit by a huge influx of refugees from Afghanistan, Kyodo said.

No government confirmation of the reports was available.

Prime Minister Junichiro Koizumi said in early November he was considering new economic assistance to Pakistan when he met Pakistani Finance Minister Shaukat Aziz here.

Aziz asked Koizumi to consider new economic aid to Islamabad including the rescheduling of Pakistani debts to Japan.

Last month, Tokyo announced it was lifting sanctions against India and Pakistan — imposed in 1998 over their tit-for-tat nuclear weapons tests.

The move will lift a three-year freeze on grant and loan aid to India and Pakistan and end the tough stance Japan vowed to take on multinational development bank loans to the two countries.

Japan also said last month it would reschedule $550 million of Pakistan’s debt in recognition of Islamabad’s support for the international war on terrorism.

In September, Japan approved 4.7 billion yen ($40 million) worth of emergency aid to Pakistan — three billion for infrastructure aid and 1.7 billion yen to cope with a possible flood of refugees. —AFP