November 24, 2001	Saturday	Ramazan 8, 1422

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ISLAMABAD, Nov 23: The US has indicated to Pakistan that it is prepared to extend repayment period of its outstanding loan to 40 years with a grace period of 16 years.

According to independent economists, this would amount to a write-off of about 35-40 per cent of the outstanding loan amounting to $3 billion.

Informed sources, however, said that Pakistan was trying to get the US to also reduce the interest rates on this loan which, if Washington agreed, would mean a write off, equivalent to 70-80 per cent of the loan.

They said Pakistan was expected to make a case for an extension in the repayment periods and reduction in interest rates for all its bilateral outstanding loans at the forthcoming Paris Club meeting tentatively scheduled for Dec 11.

Pakistan seems to have come to the conclusion that the donors for their own respective reasons were not in a position to accept its request for a write off of all its bilateral debt amounting to about $12.5 billion.

Some of the donors like Germany and Japan are reported to have explained to Pakistan that if they made an exception in Islamabad’s case then they would have to do the same for some other heavily-indebted countries as well which they were not in a position to do. Russia is said to be heavily indebted to Germany.

Meanwhile, Pakistan is said to be fairly satisfied with the extent of fiscal support which the donors are extending currently for budgetary and balance of payments support and hopes that this support would be further expanded with the passage of time.

Pakistan is also pressing for increased market access and expects the US and Japan to come around to accepting this request soon. The European Union has already enhanced the market access which alone is estimated to increase export earning by 500 to 700 million dollars annually.

Pakistan is also watching rather keenly the various international developments taking place on the Afghan reconstruction and rehabilitation front and hopes to make massive gains once these efforts are launched.

The domestic cement and iron and steel industries as well as many other economic activities are expected to get a boost as a result of the commencement of work for rebuilding Afghanistan as Pakistan because of its proximity and 2,500 km long border with Afghanistan hopes to serve as the most acceptable conduit for skilled and unskilled labour, material and capital going into Afghanistan during the reconstruction period which is likely to last for about 20 years and cost as many billion dollars.

Pakistan also expects to gain from the eventual development and exploitation of Central Asian oil and gas wealth as the US which has strategic interest in these assets would hopefully like this wealth to be marketed through Afghanistan and Pakistan routes rather than through Russian or Iranian routes.

This is said to be one of the two reasons why Pakistan believes this time the US would not walk away from Afghanistan. The other reason, it is believed, is Washington’s long-term interest in getting rid of international terrorism which it thinks has taken firm roots in Afghanistan.