ISLAMABAD, Jan 6: Pakistan managed to get its debt amounting to $6.2 billion rescheduled under the Paris Club bilateral agreement with twelve countries during the year 2002.

The rescheduling has provided a considerable relief in repayments of loans and now these would be repayable over a period of 38 years, including 15 years’ grace period, starting from May 31, 2017.

Due to the rescheduling, Pakistan’s economy has got a considerable cushion to take off from fragile conditions to economic stability.

The agreements were signed in pursuance of the Agreed Minute of Paris Club of December 13, 2001. Negotiations were held between the government of Pakistan and the governments of twelve countries on the consolidation and rescheduling of the debt owed to them.

Pakistan had sought extension in the deadline for concluding the bilateral agreements under the Paris Club rescheduling arrangements.

The need for seeking extension has arisen in view of the longer time required by the creditors in getting necessary internal approvals and following through their own procedures.

Though the deadline has expired on December 31, 2002, Pakistan has asked for its extension up to April 30, 2003, to get agreements signed with the remaining six members of the Paris Club.

According to official sources, out of the 18 Paris Club creditors, Pakistan has so far signed agreements with 12 countries — Finland, USA, Austria, Spain, Germany, France, Denmark, Switzerland, Norway, Belgium (ODA), Netherlands (Non-ODA) and Canada (EDC & CWB) — for a total amount of $6.2 billion.

Japan is the largest creditor and a bilateral agreement with it is at an advanced stage of finalization.

The consolidated non-ODA debt of US $ 0.7 billion will be repayable over a period of 23 years, including 5 years grace period, starting from May 31, 2007.

The interest rates on ODA debt are an average of original concessional rates while those of non-ODA debt are according to appropriate market rate.

The Norway government has agreed to reschedule non-ODA outstanding debt amounting to US $32.367 million and now it will be repaid in 23 years, including a grace period of 5 years.

Pakistan and Finland signed an agreement on consolidation of debt under which Pakistan’s debt amounting to US $6.122 million has been rescheduled and is to be repaid in 23 years, including 5 years grace period, at the interest rate of six month LIBOR for US dollars plus 0.55 percent per annum.

The Kingdom of Denmark has written off total outstanding debt amounting to DKr. 132.753 million (equivalent to US $18.4 million).

Pakistan successfully negotiated a stock rescheduling of its Paris Club bilateral external debt of $ 12.5 billion ($8.8 billion ODA & $3.7 billion non-ODA) in December, 2001.

Pakistan became the fourth non-HIPC country, after Egypt, Poland and Yugoslavia, to avail itself of this facility.

According to the sources, the first rescheduling agreement was reached in January 1999 for debt amounting to $3.0 billion and the second rescheduling agreement was signed in January, 2001, for debt totalling $1.8 billion.

According to the third rescheduling, the ODA debt will be repayable in 38 years including a grace period of 15 years, while the non-ODA debt will be repayable over a period of 23 years, including 5 years grace period.

This rescheduling has provided substantial debt relief to Pakistan. On the basis of ODA interest rate of 2.3 per cent and non-ODA interest rate of 4.0 per cent, Pakistan will be saving $2.7 billion in three years (2001-02 to 2003-04) and $8.5 billion during the grace period of ODA debt.

Pakistan’s total stock of external debt and the foreign exchange liabilities as of March 31, 2002 stood at $36.0 billion and almost $ one billion lower than end-June, 2001.—APP