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Paris Club to mull allowing Pakistan to delay debt repayment.

TOKYO, Nov. 1 Kyodo

Japan, the United States and European members of the Paris Club, which groups the world's richest creditor states, are expected to discuss steps to soften the debt repayment burden on Pakistan in view of its key role in the U.S.-led attacks on Afghanistan, sources close to the issue said Thursday.

They will likely consider steps to allow the Pakistani government to postpone repayments on its $30 billion in debt as well as provision of fresh loans to the country, the sources said.

Of the total, Pakistan owes $5.6 billion to Japan.

Help from the Paris Club would be a new boon on top of Friday's decision by Japan to remove economic sanctions on Pakistan.

The sanctions, including a freeze on fresh loans and grants, were imposed after Pakistan conducted nuclear weapons tests in May 1998.

Pakistani Finance Minister Shaukat Aziz told Japanese Foreign Minister Makiko Tanaka earlier in the day that Islamabad will no longer ask Japan to waive claims on its loans to Pakistan.

A debt waiver had been asked Oct. 17 by Pakistan's president, Gen. Pervez Musharraf, in a telephone call with Japanese Prime Minister Junichiro Koizumi.

Musharraf cited the deterioration of the Pakistani economy springing from the Sept. 11 terror attacks in the United States as a reason for the request.

After Koizumi expressed reluctance to grant debt relief to Pakistan, Aziz flew to Japan to ask Tokyo to allow his country to postpone debt repayments instead.

Aziz, in Japan for a four-day visit until Saturday, told Tanaka that easing debt repayment terms would give Pakistan some breathing space in its fiscal situation and help it tackle domestic issues such as poverty and education.

Aziz said stability in Pakistan, which he described as a front-line country and the only nation in the world to maintain diplomatic ties with the Taliban rulers of Afghanistan, will lead to stability in the entire region.
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Publication:Asian Political News
Date:Nov 5, 2001
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