NEW YORK: Japan has further cut the very nominal interest rate to 0.01 percent on a $2.5 billion loan which Tokyo is ready to provide Islamabad for the Karachi Circular Railway project, likely to be discussed between prime ministers of Pakistan and Japan on the sidelines of the UN General Assembly here.
The Japanese are waiting for a go ahead signal from Islamabad as all other steps of the project have already been completed. These include the feasibility study, re-settlement action plan and environmental impact assessment.
Other conditions for the JICA loan have also been met by Pakistan including exemptions from GST, customs duty and taxes. The PC-1 of the project was approved by Ecnec in August 2012. Land has been allocated by the Railways ministry while no major traffic diversions or relocation of utilities is involved.
But Islamabad has so far not made the formal request and if PM Nawaz Sharif raises the issue in New York with the Japanese PM, the loan could be available within weeks as only one major step of an appraisal mission is left which the Japanese say would take about three weeks to complete.
A $2.5 billion loan to Pakistan on almost zero interest rate for 40 years with a 10 year grace period would also help Pakistan’s falling rupee against the dollar, experts say.It is yet to be seen if Nawaz Sharif will bring up the issue because if he does not, domestic politics would be the main consideration.