Belgium cancels debt worth 10 mln Euros owed by Pakistan

Singapore, Jan 31 (UNI) The Belgium government has agreed to cancel about 10 million euros based on net present value (about 13 million dollars) in a debt owed by Pakistan, which will in turn transfer the equivalent funds into ADB's Pakistan Earthquake Fund (PEF).

''We are very pleased to conclude this innovative co-financing approach with Belgium to finance additional reconstruction works particularly in the health and education sector,'' said Werner Liepach, Principal Director of ADB's Office of Co-financing Operations in Manila today.

A preliminary damage and needs assessment report prepared by ADB and the World Bank only 19 days after the quake estimated that about 5.2 billion dollars was needed to effectively carry out a relief, recovery and reconstruction strategy.

During the donor conference held on November 19, 2005, ADB pledged one billion dollars for Pakistan's reconstruction efforts from the quake.

Before the conference, ADB had reallocated 80 million dollars from various ongoing projects and also established PEF, which included an initial contribution from ADB of 80 million dollars in grants.

Similar to ADB's Asian Tsunami Fund, PEF aims to pool and promptly deliver grant financing for projects that support immediate reconstruction, urgent rehabilitation, and other associated development activities.

Belgium's debt-for-development swap, totalling 9.92 million based on net present value in debt owed by Pakistan, followed a similar move in December by Norway, which cancelled 20 million dollars equivalent in debt to be remitted to the PEF.

Agreements have also been signed with Finland to contribute 12 million dollars and Australia 15 million dollars to the PEF.

The earthquake that struck the northern areas of Pakistan in October 2005 was the most devastating in its history. Official figures estimated that at least 80,000 people were killed and more than 2,00,000 were injured in the north west Frontier Province and Azad Jammu and Kashmir (AJK).

Some 2.6 million were left without shelter and an estimated 1.6 million without adequate food security or means of livelihoods.

There was extensive damage to economic assets, and infrastructure, with hospitals, schools and transport systems debilitated or destroyed.

UNI