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Thursday, 27 September, 2001, 16:48 GMT 17:48 UK
Japan eases Pakistan's debt burden
Pakistani women at a rally to back the government's position on terrorism
Rallies backing the government were held on National Day
Pakistan is to get over half a billion dollars in debt rescheduled by Japan, in recognition of its move to back the global "fight against terrorism".

Tokyo is also offering $40m in emergency aid, and has agreed to review, if not actually rescind, the sanctions it imposed after Islamabad's tit-for-tat nuclear tests with India in 1998.

Even with the sanctions in place, Japan is Pakistan's biggest source of foreign aid.

"We can understand that sanctions have made Pakistan's balance of payment situation more grave," said Seiken Sugiura, senior vice minister for foreign affairs.

"But this emergency economic assistance will give it more space."

Assistance with refugees

Japan is also ready to consider further assistance, which could include aircraft to ease delivery of supplies to the more than two million Afghan refugees either within Pakistan or waiting on its borders.

A Pakistani man hefts a bag of rice donated by Japan
Japan remains Pakistan's biggest aid donor
"It's very important to support Pakistan, which has made great efforts to support the international community despite various difficulties," said Mr Sugiura, who is in Islamabad on a two-day visit as envoy for Japanese prime minister Junichiro Koizumi.

"Japan wishes to stand by Pakistan."

IMF help

The debt rescheduling represents Pakistan's second economic dividend in two days from President Pervez Musharraf's decision to distance the country from Afghanistan's Taleban rulers.

On 26 September, the International Monetary Fund (IMF) approved a $135m cash injection, the final tranche of a $596m loan.

The IMF said Pakistan had hit inflation and balance of payments targets set for the loan despite adverse weather and other conditions.

Four days earlier, the US had lifted its own sanctions, enabling the IMF to complete its loan programme.

See also:

26 Sep 01 | Business
Pakistan wins IMF cash
24 Sep 01 | Business
Pakistan's airline under pressure
24 Sep 01 | Business
Pakistan's exchanges re-open
23 Sep 01 | Business
Sanctions boost for Pakistan economy
22 Aug 01 | Business
Pakistan seeks new IMF money
14 Aug 01 | Business
Boost for Pakistan economy?
25 Jul 01 | South Asia
World Bank praises Pakistan's reforms
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