An intergovernmental framework agreement was signed on Wednesday between Pakistan and Denmark to improve financial cooperation in the energy and water sectors.
According to a press release issued here, the agreement, which was signed by the secretary of the ministry of economic affairs, Muhammad Humair Karim, and the ambassador of Denmark, Lis Rosenholm, allowed for interest-free loans in the sectors of renewable energy, energy efficiency, water supply, and waste-water treatment.
The ambassador also held a brief discussion with Sardar Ayaz Sadiq, the minister of economic affairs, in his office. He explained to the ambassador that although relations between Pakistan and Denmark were amicable and cordial, there was still room for improvement.
He further stated that the efforts to revive the nbilateral economic and development cooperation paid off with Denmark agreeing to provide on-budget support to the government of Pakistan through the Inter-Governmental Framework Agreement. The focus on Waste Water Treatment Projects in Faisalabad and Lahore was immensely appreciated.
On August 4 of this year, the federal cabinet gave its approval to the signing of the framework agreement with Denmark. This framework agreement marks a turning point in the bilateral and economic ties between Pakistan and Denmark, who have collaborated successfully on development projects since 1969; prior to this deal, Denmark had not provided any ongoing, on-budget financial assistance to Pakistan since 2017.
In response to efforts to revive bilateral economic and development cooperation, Denmark agreed to support the Pakistani government within budget through this Inter-Governmental Framework Agreement.
After this agreement is signed, the interest-free loans will have a 35% concessional element that will cover the loan’s interest, the export premium, the bank margin, and an upfront grant if these costs don’t total 35% of the contract value.
The ambassador, the Danish International Development Agency (DANIDA), and the Danish government were thanked by the secretary of the Economic Affairs Division for their assistance to Pakistan.