KARACHI, May 6: Although Pakistan has serviced $1.669 billion over the last three years, the Paris Club loan has been rising, reflecting high interest rates even after rescheduling and restructuring of loans.

Pakistan had approached the Paris Club for rescheduling and restructuring of loans and succeeded in getting them restructured in 2001. Paris Club creditors agreed on January 23, 2001 to a restructuring of its public external debt.

The stock of Pakistan’s public sector debt owed to the creditors was estimated at $12.2 billion as of November 1, 2000, out of which $11.3 billion is pre-cut-off-date claims.

Pakistan has been paying regularly interest and principals after the rescheduling of $1.8 billion arrears and restructuring of $11.3 billion but instead of declining, the total amount has increased.

According to official data, Pakistan had paid $302.1 million as debt-servicing in 2002-03, which included $110 million as interest and $192.1 million as principal amount. The amount rescheduled was $760.8 million.

On June 30, 2002, the total Paris Club debt was $12.529 billion. The amount further increased to $12.617 billion on June 30, 2003.

Pakistan paid $834.3 million as debt-servicing, but the total amount on June 30, 2004 increased further to $13.565 billion. The amount of $834.3 million included $518.7 million principal and $315.6 million interests.

During the fiscal year 2004-05, Pakistan paid $532.9 million as debt-servicing, including $151.6 million principal and $381.3 interest. The total Paris Club debt reached $12.473 billion by December 31, 2005.

Pakistan paid a total of $1.669 billion as debt-servicing during 2002 to 2005. It included $780.3 million principal and $889 million interests.

The stock of Paris Club debt was estimated at $12.2 billion, out of which $11.3 billion is pre-cut-off-date claims (74 per cent is official development assistance (ODA) loans). Loans issued after a cut-off date are not rescheduled or restructured by the Paris Club. Pakistan’s post-cut-off loans were just $0.9 billion.

According to the rescheduling programme, non-ODA credits were to be repaid over 18 years, with three years of grace and progressive payments, at the appropriate market rate. The ODA credits are to be repaid over 20 years, with 10 years of grace, at an interest rate at least as favourable as the concessional rates applying to those loans.

Interest rates to be applied on the restructuring were to be negotiated with each creditor country by Pakistan in bilateral agreements. Pakistan made these agreements but the details of interest rates committed with other countries were not available.

It was made clear before the Paris Club agreement that ODA loans would be rescheduled at a below-market interest rate not higher than the interest rate of the original credits.