ISLAMABAD, March 26: Japan is considering offering only increased amount of grants to Pakistan instead of hard loans to help the country to come out of its big debt trap.

“We have offered 300-million-dollar grant to Pakistan recently for two years which is likely to be significantly increased once we conclude new bilateral discussion shortly,” said Sadaaki Numata, Ambassador of Japan to Pakistan.

He told Dawn here on Tuesday that Japan had decided at least for the time being not to resume annual assistance of roughly $500 million under the yen package loan programme.

“We are constrained to extend new loans until Pakistan solves its huge debt problem,” he said, adding that Western countries as well Japan were trying to address the issue of debt on priority.

He said if the interest rate on Pakistan’s loans was reduced by the Paris Club, it would be a big achievement.

“My government is trying to do some thing concrete for Pakistan at the Paris Club forum.”

The Japanese envoy dispelled the impression that President Gen Pervez Musharraf had returned empty-handed from Japan, as the Japanese government had not announced resumption of the suspended aid to Pakistan.

If Pakistan’s roughly $12 billion bilateral loans, including $5 billion Japan’s loans, were considerably reduced by getting the interest rate lowered, it would be a significant development for the country, he said, adding that efforts were being made to provide debt relief to Pakistan on concessional terms.

Mr Numata urged Pakistan to sign the Comprehensive Test Ban Treaty (CTBT) to further qualify for more assistance, specially from Japan. “If Pakistan signs this treaty ahead of India, it will certainly have more advantages, especially in terms of economic assistance.”

He said that his country was also asking India to sign the treaty with a view to ensuring non-proliferation of nuclear weapons.

He appreciated President Musharraf’s statement in Japan that Pakistan had announced a moratorium on nuclear tests.

He dispelled another impression that Japan had linked the resumption of annual aid to Pakistan with the signing of the CTBT.

“In fact, we have already de-linked the issue when Pakistan decided to support the international community on the issue of terrorism,” he said, adding that signing of the treaty was in favo-ur of both India and Pakistan.