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Japanese PM says yen loans to Pakistan to resume
Updated: 2005-04-30 20:59

Japanese Prime Minister Junichiro Koizumi announced the resumption of yen loans to Pakistan on Saturday during a visit that Japan said would put relations back on track.

Koizumi, who arrived in Islamabad from India, held talks with President Pervez Musharraf for an hour.

"In line with our plans to boost our economic aid for Pakistan, we want to resume yen loans," a Japanese government official quoted Koizumi as telling Musharraf.

The official declined to say whether Koizumi had specified an amount but said that was likely to be discussed when Koizumi met Pakistani Prime Minister Shaukat Aziz later in the day.

Japan, the only country ever to suffer a nuclear attack, froze all new loans and grants except for humanitarian aid, to both Pakistan and its neighbour and rival India after their 1998 tit-for-tat nuclear tests.

While Japan has since resumed loans to India, fresh yen loans for Pakistan were put on hold as Islamabad worked out a deal to restructure $12.5 billion of debt with international creditors.

Musharraf told Koizumi that Pakistan wanted economic aid to fight unemployment and poverty, which he said were main causes of terrorism, the Japanese official said.

In 1997, the year before the sanctions, Japan gave Pakistan 32.0 billion yen ($298 million) in yen loans. Last year it gave 6.3 billion yen in grant aid and 1.8 billion yen in technological cooperation.

In a March 2003 agreement that covered Pakistan's largest borrowing from a single bilateral creditor, Japan signed a deal to reschedule $4.5 billion of debt.

Earlier, a Japanese official said Koizumi's visit would signal a fresh start in relations with Pakistan.

"The prime minister's visit will pave the way for a new start in relations between Japan and Pakistan, including economic ties," the official said.

"Japan will help Pakistan because its stability and stable growth is important not only for Pakistan itself, but also for the world," the official said.


Koizumi also expressed concern to Musharraf about a network run by Abdul Qadeer Khan, the disgraced father of Pakistan's atomic bomb, who last year admitted passing nuclear technology to Iran, North Korea and Libya, the first official said.

Japan is especially interested in information related to its neighbour, North Korea.

Musharraf said the proliferation had been done by individuals not the government. His government would prevent it from happening again and would provide Japan with any information on Khan's network, the official cited Musharraf as saying.

Earlier, another Japanese official said it was important to support Pakistan in its fight against militancy.

"We should give encouragement and support to Pakistan which stands on the front line in the war on terror," the official said.

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