ISLAMABAD, Oct 26: Japan is considering restoring its 500 million dollars annual assistance under Yen Package Loan for Pakistan because of Islamabad’s decision to combat terrorism.

According to informed sources, Japan would soon be announcing the revival of annual assistance by extending 500 million dollars under 32 Yen Package Loan programme which was suspended in 1998 when Pakistan conducted nuclear tests in retaliation for the Indian nuclear tests.

The revival of annual assistance will be in addition to little over 800 million dollars “one time grant” being offered after US and its allies decided to extend 780 million dollars cash grant to help improve the country’s economy.

The sources said that eversince the US government removed remaining military and economic sanctions against Pakistan, Japan too was considering lifting similar sanctions and that a decision to this effect would be taken soon.

President Pervez Musharraf had made a telephone call to Japanese Prime Minister last week and discussed with him the current situation in the region including enhancing trade and economic relations between the two countries.

The sources said that the Japanse Premier had assured the President that Islamabad’s assistance would not only be revived but also the possibilities would be explored for writing off the five billion dollar debt which under the present circumstances was not possible as it required amendment to the Constitution.

Officials of the Ministry of Finance and the Economic Affairs Division (EAD) believed that revival of Japanese annual assistance would greatly help increase budgetary provisions for social sectors specially during the next financial year.

According to an official of the ministry of finance, as soon as Japan lifts sanctions against Pakistan and revive assistance, a number of new development projects would be conceived and undertaken.

The funding requirements for the President’s 20 mega projects could also be met with the new assistance from Japan.

Japan had offered 300 million dollars to Pakistan in 1999 for some of the ongoing development projects despite sanctions.

Japan has emerged as the largest donor to Pakistan as it had given dollars 495 million in 1998, despite sanctions Tokyo had imposed on Islamabad following the nuclear tests.

Japan continued to extend assistance for the ongoing projects such as OECF Yen loans, Grant Aid and Technical Cooperation.

In 1998 the net disbursement of the Japanese assistance amounting to 495 million US dollarss included 424 million dollars in yen loans, 56.65 million dollars as Grant Aid and 13.94 million dollars as Technical Cooperation.

Pakistan is thus ranked as the fifth largest recipient country of Japanese assistance out of 160 countries after China, Indonesia, Thailand and India.

The share of Japan’s assistance amongst the Development Assistance Committee (DAC) countries is expected to go up more than 127 per cent over its own share in 1997.