Islamabad: The US today (July 16, 2004) wrote-off nearly half-a-billion dollar debt owed by Pakistan under an agreement signed between the two countries, a day after Deputy Secretary of State Richard Armitage visited Islamabad to discuss among other things Pakistan's chances of sending troops to Iraq. The agreement to write-off the $ 495.3 million debt was signed in Islamabad by US Ambassador to Pakistan Nancy Powell and Secretary of Pakistan Economic Division Waqar Masood Khan, taking the total debt cancellation during the past two years to one and a half billion dollars.

Powell appreciated Pakistan's economic policies initiated during the past five years and said the write-off marked a continuation of the US partnership with Pakistan.

"Our continued commitment to Pakistan is a vote of confidence in the economic stewardship of the Pakistani Government and the intelligence, energy and resourcefulness of the Pakistani people," she said.

Significantly the second debt write-off followed Armitage's visit to Islamabad yesterday during which he held talks with top Pakistani leadership.

Though Armitage said the US has not made any request to Pakistan to send troops to Iraq as part of the UN peacekeeping force, he left the issue open saying that it was up to Pakistan to "make up" its mind.

Today's debt cancellation culminates an extraordinary period of debt relief and emergency financial assistance from the US to Pakistan after 9/11 attacks, which included 600 million dollar cash transfer in November 2001 for balance of payments and budget support, rescheduling of three billion dollar debt for over 38 years in August 2002 and writing-off of one billion dollar debt in April 2003.

After the latest write off, Pakistan's debt to the US stands at around $ 1.6 billion.

Last year, President George W Bush had requested Congress to provide three billion dollars assistance to Pakistan in the next five years for its cooperation in the war against terrorism.

While half of it was meant for assistance to buy military equipment, the rest was earmarked to bolster macro-economic stability and invest in human capital and private sector development in Pakistan.

Furthermore, $ 500 million will be given to fund the ongoing USAID programmes to improve education, health and good governance in Pakistan for the next five years.