ISLAMABAD, July 27: Japan is likely to restore Pakistan’s annual $500 million official development assistance (ODA) before the end of this year to help the country achieve sustainable economic development.

Officials told Dawn on Friday that the assistance would be primarily meant to narrow the widening gap in the income distribution which was causing massive poverty across the country.

Japanese government has assured the resumption of ODA at the level of 1998 when it was discontinued owing to nuclear tests conducted by Islamabad. Pakistan was roughly receiving $500 million Japanese assistance annually prior to the 1998 explosions. It included grants, technical assistance and loans.

A high-level Japanese delegation during its visit last week held talks with senior Pakistani officials aimed at increasing Islamabad’s economic assistance. Further expansion in trade between the two countries was also discussed.

The Japanese side in the third meeting of the Japan-Pakistan high-level economic policy dialogue held on July 20 was led by Masaharu KOHNO, Deputy Minister for Foreign Affairs. Akram Malik, Economic Affairs Secretary, led the Pakistani side.

The officials said that Japan wanted the government to take into account issues like inflation, current account deficit and increased imports.

The Japanese government has also offered additional assistance for infrastructural development for which it said Pakistan’s economic affairs division should come up with viable projects to be supported by Tokyo.

The officials said that Japanese investors were interested in setting up independent power projects (IPPs) in Pakistan. In this regard joint efforts by public and private sectors were stressed to attract Japanese investors. However, Japan wanted a clear government policy in this regard, a source said, adding that Japan believed that renewable energy resources were needed to be explored in Pakistan to end power shortfall.

Asked whether Japan supported the $7.4 billion Iran-Pakistan-India (IPI) gas pipeline project, the source said Tokyo believed that various issues, including Teheran’s nuclear programme, needed to be sorted out before considering the issue.

Pakistan was asked to make its products competitive to get an access to Japanese market. The source said that both the countries were considering having the avoidance of double taxation agreement soon.

The Japan-Pakistan policy dialogue was agreed between then Japanese prime minister Junichiro Koizumi and President Pervez Musharraf during the latter’s visit to Japan in March 2002. The first round of the dialogue was held in Islamabad in February 2004. The second round was held in Tokyo in July 2005.

The dialogue was aimed at stocktaking on the economic situation and policy matter of both the countries so that relevant information could be shared between senior government officials of the two countries.