ISLAMABAD: Japan and Pakistan on Friday agreed on debt deferral amounting to about $200 million as the second phase of the ‘G20 Debt Service Suspension Initiative’.

Earlier in April, the two countries had agreed on the first debt deferral of about $370m under the same initiative.

The total amount of deferred debt has now reached $570m, which will widen the fiscal space for the government of Pakistan to restore its economy affected by the Covid-19 pandemic, the Japanese embassy said in a press release.

The concessional loans, subject to debt deferral, have been utilised for infrastructure development such as roads, tunnels, power plants and grids, irrigation, water supply, and drainage facilities in Pakistan from the early 1990s to the mid-2010s.

These loans have favourable conditions for Pakistan in terms of low interest rate, as well as long grace and repayment period.

Under the second agreement, repayments for the debt and interest due between January 1 and June 30, 2021, will be rescheduled after December 15 next year.

In addition to the debt deferral, Japan has also extended $23.5m in grants to Pakistan for supplementing its counter-Covid measures.

Ambassador of Japan Matsuda Kuninori, who is completing his tenure in Pakistan, said in a statement that he was aware that Pakistan’s coronavirus-affected economy was on a solid recovery path, including the prospect of higher GDP growth.

Published in Dawn, October 23rd, 2021