Japan Agrees to Defer Pakistan’s $160 Million Debt

The Governments of Japan and Pakistan agreed on debt deferral amounting to approximately US$160 million, as the last phase of the G-20 “Debt Service Suspension Initiative (DSSI)”. Prior to this, both governments agreed on the first debt deferral amounting to approximately US$370 million on April 27, 2021, and the second debt deferral amounting to approximately US$200 million on October 22, 2021, under the same initiative. The total amount of deferred debt has reached US$ 730 million, which will widen the fiscal space for the Government of Pakistan to restore its economy affected by the COVID-19 pandemic and the flood disaster. The concessional loans, subject to debt deferral, have been utilized for infrastructure development such as roads, tunnels, power plants and grids, irrigation, water supply, and drainage facilities in Pakistan from the early 1990s to the mid-2010s. These concessional loans have favorable conditions for Pakistan in terms of low-interest rates, as well as long grace and repayment period. Under the last agreement, repayments for the debt and interest due between July 1 and December 31, 2021, will be rescheduled after June 15, 2023. In addition to the debt deferral, the Government of Japan decided to extend an Emergency Grant Aid of USD 7 million to Pakistan in response to the damages caused by the flood disaster that has occurred in Pakistan since mid-June. This Emergency Grand Aid will allow the implementation of humanitarian assistance activities for those seriously affected by the flood disaster in different parts of Pakistan through multiple international organizations in areas such as food, shelter, and non-food items, health and medical care, as well as water, and sanitation. Wada Mitsuhiro, Ambassador of Japan to Pakistan, reaffirmed his commitment to support Pakistan, “I would like to assure that the Government of Japan stands ready to support the people of Pakistan. Given the rapidly rising scale of needs, we consider it critical to extend our best support and stand available to the affected. As part of the ‘2022 Floods Response Plan’, we will extend our assistance, ensuring collective and coordinated actions to respond to the national emergency”. The Government of Japan has already provided tents and plastic sheets as emergency relief goods through JICA, and these items are now being distributed to people in need.