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Monday, 18 February, 2002, 12:28 GMT
Pakistan reaps war dividend
Shaukat Aziz
Pakistani trade faces war-related disruption
Pakistan is in line for a financial reward for supporting the US-led campaign against terrorism in neighbouring Afghanistan.

Pakistan expects the US to write off more than a third of the money it owes, the country's Finance Minister Shaukat Aziz said following a visit to Washington.

The expected $1bn (698m) write-off of the $2.8bn loaned by the US to Pakistan has yet to be approved by Congress.

A debt waiver would help the south Asian country overcome a slowdown in economic growth caused by the war in Afghanistan.

The country owes a total of $38bn to overseas creditors, and the possible waiver would provide much-needed breathing space.

The US has also promised Pakistan an aid package worth more than $1bn of which $600m has already been delivered.

War billing

The US is also expected to pay Pakistan more than $60m a month for logistical support provided during the main phase of the war on terrorism.

Shaukat Aziz
Shaukat Aziz promises a debt write-off

Mr. Aziz said at the weekend that his country was "in the process" of billing Washington $300m for logistical support up until the end of January. After that, the country will issue monthly bills that will average $60m, he added.

Pakistan will charge the US for fuel, food, water, transportation, repairs and other services provided to the American forces in Afghanistan.

Investors' comeback

Meanwhile, the US Overseas Private Investment Company said it had approved projects in Pakistan worth $200m as part of a plan aimed at boosting local industry and attracting foreign investors.

The money will be used to fund energy, software and gas projects, OPIC said.

Shaukat Aziz
Washington rewarded Pakistan's support to the US-led campaign
More investment projects are expected to be discussed during a two-day conference organised by the International Chamber of Commerce.

The meeting, which is due to conclude on Monday, is taking place in Karachi, Pakistan's main commercial hub.

Most overseas investment and loan programmes in Pakistan were stalled after creditor nations slapped sanctions on the south Asian country in the wake of controversial nuclear tests in 1998.

Islamabad's commitment to providing overall support to the Washington-led war against terrorism persuaded other countries to lift the sanctions, clearing the way for a fresh round of loans, investments, and debt write-offs

The International Monetary Fund and the World Bank also welcomed structural and fiscal reforms, implemented in the past two years.

The international finance agencies have resumed a loan programmes stalled after a military coup in October 1999.

Foreign aid is of critical importance to Pakistan's struggling economy, hit hard by the war in Afghanistan.

Pakistan's central bank has downgraded its economic growth target for the year to 30 June by 1% to 3%.

See also:

16 Feb 02 | South Asia
Musharraf berates Muslim world
29 Oct 01 | Business
Pakistan to miss growth forecasts
22 Oct 01 | Business
Pakistan counts cost of war
24 Sep 01 | South Asia
US Pakistan sign debt deal
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