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| 17 September 2004 | Friday | 01 Shaban 1425 |
Britain writes off £19 million debt
LONDON, Sept 16: Britain has cancelled 19 million pound sterlings debt to Pakistan. The British Department for International Development (DFID) here "today cancelled 19 million pounds of debt owed by Pakistan.
The outstanding loans were made by the former Commonwealth Development Corporation to the Karachi Water and Sewerage Board and were transferred over to DFID in 2000," said a DFID statement.
Pakistan's High Commissioner to Britain Dr Maleeha Lodhi informed Prime Minister Shaukat Aziz about the UK's decision on Wednesday. British Secretary of State for International Development Hillary Benn had already written to the prime minister to notify that DFID had cancelled former CDC debt to Pakistan, Dr Maleeha said on Thursday.
"The only other inter-governmental debt between UK and Pakistan relates to export credit guarantee following Paris Club agreement. The debt was rescheduled and now valued at only nine million pound sterling," said the DFID's statement.
In 2001, DFID had agreed to cancel the ex-CDC debt, provided Pakistan completed the second review of the International Monetary Fund's Poverty Reduction Growth Facility.
In the meantime, the debt was suspended with no interest payments required from Pakistan. On June 23, the IMF's executive board "successfully completed the second annual review of Pakistan's PRGF, which means the ex-CDC debt can now be cancelled."
Commenting on the loan's cancellation, Gareth Thomas, Parliamentary Under-Secretary of State for International Development said: "Our programme in Pakistan continues to be a high priority for the department."
"In 2003, DFID provided Pakistan with 55 million pounds to cancel debt held with the Asian Development Bank, World Bank and International Monetary Fund," said Gareth Thomas.
Mr Thomas said that over the next two years (2004-5 and 2005-6), DFID's assistance to Pakistan would be 70 million and 74 million pound sterling, respectively. He said it would support Pakistan to achieve the 'Millennium Development Goals' through implementation of the Poverty Reduction Strategy.
"We hope to help the Pakistani government increase the incomes of poor people, improve services to them and increase the accountability of the state to the poor," said Mr Thomas.
Following the Paris Club Agreement, the debt was rescheduled and was now valued at only 9 million pound sterling. This cancellation is in addition to the 2004-5 DFID Pakistan Programme allocations amounting to 70 million pound sterling.
In the last two years, DFID's development cooperation with Pakistan had increased substantially, sources said. -APP
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