Japanese govt agrees to defer $160m debt

The governments of Japan and Pakistan have agreed on a debt deferral amounting to $160 million as the third and last phase of the ‘G20 Debt Service Suspension Initiative (DSSI)’. The total amount of deferred debt has now reached $730m, which will provide the fiscal space for the Pakistan government to restore its economy affected by the Covid-19 pandemic and the floods, the Japanese embassy announced on Wednesday. Prior to this, both governments had agreed to the first debt deferral amounting to $370m in April 2021 and the second debt deferral amounting to $200m on October 2021, under the DSSI initiative. Concessional loans, subject to debt deferral, have been used 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.