ISLAMABAD, Oct 28: Germany agreed on Sunday to provide 150 million Deutschmark(DM) financial support to Pakistan that includes DM 50 million economic aid and DM 100 million debt- equity swap for two years.

Besides this, DM 100 million will be made available through Hermez Bank as supplier’s credit. Germany will also assist Pakistan in getting financial support and debt relief from multilateral and bilateral forums. Germany has also declared Pakistan “the priority-partner country”, said Finance Minister Shaukat Aziz.

Speaking at a joint press conference with Mr Aziz, the German Minister for Economic Cooperation and Development, Heidemarie Wieczorek-Zeul, said the two sides had discussed all areas of development cooperation, including economic and financial support for Pakistan from international financial institutions, the World Bank and the International Monetary Fund.

She said her country appreciated Pakistan’s initiatives for poverty reduction, and offered its services to support Pakistan’s efforts.

The German minister said her country had already provided DM 70 million for Afghan refugees and another DM 15 million would be added to this amount.

Replying to a question, she said German Chancellor Gerhard Schroeder agreed that the international community should work with the World Bank on a sustainable basis and Germany would do whatever it could for a permanent cooperation.

She said that the two sides had discussed the question of bilateral debt relief that could involve stretching the period or other measures, but technical details could be discussed later.

Mr Aziz said that over $1 billion German debt could be turned into grant if new human development projects were launched by Pakistan. He said Germany had revived economic aid to Pakistan and, as a first step, would provide DM 50 million under this head.

In addition to this, Germany had offered DM 50 million debt equity swap for the current year and another DM 50 million for the next year for utilization in investment, education and health sectors, he said. This amount, he added, Pakistan used to pay back but since this would be used for human development, it would be converted into grant.

Mr Aziz said that another DM 100 million would be provided by Hermez Bank and this amount could be increased according to requirements.