ISLAMABAD, Aug 23: The United States here on Friday rescheduled its $3 billion debt to Pakistan.

A bilateral agreement to this effect was signed by the US Ambassador to Pakistan Ms Nancy Powel and Secretary Economic Affairs Division (EAD) Dr Waqar Masood Khan.

Of the total $3 billion debt rescheduling, $2.3 billion are official development assistance and will be repayable over a period of 38 years and $700 million non-official development assistance to be repayable over a period of 23 years.

Speaking on the occasion, the US ambassador said Washington agreed to provide this relief because of strong economic reforms programme that the present government has put in place. She expressed the hope that the recent economic recovery and the debt relief will add to the strength of Pakistan economy.

She said the United States in November last year provided a cash assistance of $600 million to Pakistan for budgetary support.

Ms Nancy Powel referred to the reopening of USAID office in Pakistan and said they will remain engaged with Pakistan in health sector, family planning, maternal health and fund projects for development of democratic institutions. Her country, she promised, will also encourage investments in Pakistan.

Finance Minister Shaukat Aziz, also present on the occasion, said that Pakistan’s domestic and foreign debt ratios have gone down significantly when compared with the percentage of GDP, current expenditure and revenue collection over the past couple of years.

He said the domestic debt as a percentage of GDP came down from 52 per cent to 47 per cent. The foreign debt has shrunk from $38 billion to $36 billion and hoped this trend will continue.

The debt servicing as a percentage of GDP has fallen from 11 per cent to 8.6 per cent at the end of last financial year and will further go down to 7.2 per cent at the end the current financial year, he added.