Restructuring the debt of Pakistan

Paris Club creditors agreed on January 23, 2001 with the Government of the Islamic Republic of Pakistan to a restructuring of its public external debt. Representatives of the creditor countries welcomed the efforts at economic recovery undertaken by Pakistan, and supported by a Stand-By Arrangement approved by the International Monetary Fund on November 29, 2000.

The agreement provides for the rescheduling of roughly US$ 1.8 billion consisting of arrears as of November 30, 2000 and of maturities falling due between December 1, 2000 and September 30, 2001.

The rescheduling is conducted under the so-called "Houston terms" : non-Official Development Assistance credits are to be repaid over 18 years, with 3 years of grace and progressive payments, at the appropriate market rate ; Official Development Assistance credits are to be repaid over 20 years, with 10 years of grace, at an interest rate at least as favourable as the concessional rates applying to those loans. The repayment profile of the rescheduled amounts is attached.

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

This debt restructuring will make an important contribution to improving Pakistan's economic outlook, will support Pakistan's reform and poverty reduction efforts and will contribute to meeting Pakistan's financing requirements during the period of its current IMF Stand-By Arrangement (November 2000 to September 2001).