Rescheduling of the debt of Pakistan

Paris Club creditors agreed on December 13, 2001 with the Islamic Republic of Pakistan to a restructuring of its public external debt. Representatives of the creditor countries welcomed the efforts for economic recovery undertaken by Pakistan, supported by a three year arrangement under the Poverty Reduction and Growth Facility with the International Monetary Fund, approved by the Executive Board of the Fund on December 6, 2001.

The agreement provides for a comprehensive restructuring of a stock of debt amounting to US$ 12.5 billion as of November 30, 2001.

The restructuring is conducted according to the following terms : commercial credits are to be repaid over 23 years, with 5 years of grace and progressive payments, at the appropriate market rate ; Official Development Assistance credits are to be repaid over 38 years, with 15 years of grace at in interest rate at least as favourable as the concessional rates applying to those loans. The repayment profile of the restructured amounts is attached.

Taking into account the current situation of Pakistan, the Participating Creditor Countries decided to grant the Islamic Republic of Pakistan substantial cash-flow relief during the program period. They decided to defer between November 30, 2001 and June 30, 2002 the maturities of post cut off date debts as well as the interest payments due on the restructured amounts. During the following two years, 20% of interest payments will also be deferred.

The Islamic Republic of Pakistan commits itself to seek comparable treatment from its public and private external creditors.

Each creditor may also undertake, on a voluntary and bilateral basis, debt swaps, including debt for nature, debt for aid and debt for equity swaps.

This exceptional debt restructuring will make an important contribution to improving the Islamic Republic of Pakistan's medium term economic outlook, as well as support economic and social reform programs and poverty reduction efforts. It will also contribute to meeting the Islamic Republic of Pakistan's financing requirements during the period of its current IMF program.