ISLAMABAD, Nov 15: Pakistan and the United States on Thursday signed an agreement under which Washington would provide $600 million in direct budget and balance-of-payments support to Islamabad.

Agreement to this effect was signed here by Economic Affairs Division Secretary Nawid Ahsan and US Ambassador to Pakistan Wendy Chamberlin. Finance Minister Shaukat Aziz attended the ceremony.

The ambassador also detailed the “billion dollar plus” package for the people of Pakistan.

She said that President George W. Bush had announced an over $1 billion aid package for the people of Pakistan when he had met President Gen Pervez Musharraf in New York on Saturday.

Today, the ambassador said, they signed a memorandum of agreement to provide an important piece for that “one billion dollar plus” package. “It is $600 million and over Rs36 billion in grant aid,” she added.

The ambassador elaborated that it was a grant aid for direct budget and balance-of-payments support to assist Pakistan in its foreign exchange needs, adding the US was helping Pakistan to get out of its debt trap and “we are encouraging others in the Paris Club to do the same”.

Ms Chamberlin said that Rs36 billion would help Pakistan in its social sector priorities, including education, job creations and health.

She said the US was impressed with the strong support extended by Pakistan to the international community in its fight against terrorism.

She said that Sept 11 terrorists attacks in the United States had put an additional strain on the world economy. No where had that been more evident than on Pakistan, which prior to that event had put into place a strong economic reform and poverty alleviation programme, she added.

She said the aid was being provided to support the government’s reform agenda and to mitigate the impact of the economic downturn on the Pakistan economy.

In addition to $600 million, the ambassador said the US had also agreed to provide the following bilateral assistance to Pakistan:

- $73 million in border security funds to assist federal, provincial and district governments in controlling Pakistan’s long border.

- A $300 million line of credit for investment promotion from the Overseas Private Investment Corporation. And an unspecified amount from the US Export-Import Bank.

- $30 million in section 416 (b) soybeans and soybean oil.

- $17.4 million in ongoing support to the NGOs involved in education, health, women’s empowerment and micro-finance.

- $15 million in refugee assistance in Pakistan.

- $3.1 million on child labour eradication programme in the soccer ball and carpet weaving industries.

- $2.8 million in direct support to education.

- $1.8 million to support democracy and governance programmes through NGOs.

- $34 million in ongoing counter-narcotics programmes.

- $6.5 million in anti-terrorism interdiction training programme.

- $150,000 to local NGOs for education, health and local government empowerment under the Democracy Small Grants Programme.

The ambassador said that her government had made plans to increase US development assistance, including the opening of a USAID mission to Pakistan. The mission will focus on education and health programmes at the district level.

In addition, she said the US government had also taken the following steps to support Pakistan:

-On Sept 24, an agreement was signed to reschedule $379 million in government-to-government debt owed by Pakistan to the United States.

-All US nuclear, military takeover and debt sanctions were withdrawn as of Oct 20, permitting the resumption in bilateral support to Pakistan.

-The US committed to support an IMF Poverty Reduction and Growth Facility for Pakistan.

-The US supports an additional rescheduling of Pakistan’s bilateral debt at the up-coming Paris Club meeting.

Mr Aziz thanked the US for providing over $1 billion economic assistance to Pakistan for the development of social sector, poverty reduction, human resource development and reducing debt burden. He hoped that the Pakistan-US relationship would be strengthened.—APP