ISLAMABAD, May 6: Pakistan said on Tuesday it hoped the United States would write off another $1.8 billion in debt to help its key ally in the war on terror fight poverty.

The official APP news agency said Finance Minister Shaukat Aziz had asked for the cancellation of Islamabad’s remaining debt to Washington at a meeting with US Ambassador to Pakistan Nancy Powell held a day before a visit by US Deputy Secretary of State Richard Armitage.

The United States signed a formal agreement with Pakistan last month to write off $1 billion in debt.

Mr Armitage headed for South Asia on Tuesday to encourage a diplomatic thaw between Pakistan and India.

APP said Mr Aziz and Ms Powell agreed that reduction of tension in the region would speed economic development.

Mr Aziz said writing off the remaining debt would “provide fiscal space for re-directing funds for improving social infrastructure, including health and education in Pakistan”.

Mr Aziz said that during his recent visit to the US he had substantial discussion with Secretary of Treasury on increasing economic cooperation between the two countries.

He said it was redeeming factor that Pakistan had a gross foreign exchange reserves of around $10.5 billion, GDP growth was expected to be 4.5 per cent, and exports during the nine months registered a record increase of over 20 percent.

Export of primary commodities increased by 23.5pc, textile manufacture by 22pc and others by 11pc, he said, adding that imports registered an increase of 23pc.

Ms Powell appreciated Pakistan’s efforts for fast track development of Gwadar port. She said the port would be an effective trading link and an economic hub to serve as a cost-effective base for the Central Asian States and Afghanistan.

She hoped that Gwadar port’s linking with Central Asia, the Gulf and the Middle East would trigger economic activity in Pakistan and benefit the entire region.

The two sides agreed that reduction of tension in the region would further accelerate economic development.—Agencies