Pakistan offers $5m trade credit to Nepal
Pakistan Times Business & Commerce Desk

KATHMANDU (Nepal): Pakistan on Wednesday offered Nepal $5 million in trade credits and talks on a free trade agreement after the first meeting of senior economic officials of the two countries in a decade, Nepal’s finance ministry said.

Nepalese Finance Minister Madhukar Shumsher Rana and Pakistan’s Minister of State for Economic Affairs Hina Rabbani Khar concluded two days of talks by signing an agreement to boost trade and investment in the fields of health, textiles, pharmaceuticals, tourism and civil aviation.

The economic package by Pakistan comes after India cut military aid to the Hindu kingdom following a February 1 seizure of power by King Gyanendra.

"Both sides agreed to form a joint task force to initiate negotiations on a bilateral free-trade agreement," the Nepalese finance ministry said in a statement issued at the end of the meeting of the Pakistan-Nepal Joint Economic Commission (JEC).

The two countries also committed to a proposal by the South Asian Association for Regional Cooperation for a regional free trade pact in the next few years.

In addition, Pakistan offered a $5 million credit facility and asked Nepal to utilise it for the furtherance of bilateral economic relations between the two countries, the statement said.

Nepal, where a Maoist insurgency has left more than 11,000 people dead since 1996, is one of the 10 poorest nations in the world and relies on international donor aid for more than half of its development budget.

"The holding of a (JEC) meeting after an interval of 10 years would go a long way in solidifying trade and economic relation between the two countries in various fields," the ministry said.

Trade between the countries is less than $14.5 million a year as Nepal has traditionally shunned wider economic ties with Pakistan in favour of India.

The two sides also discussed how to solve the difficulties encountered during transit of goods imported and exported to Pakistan that have to transit through either India or China.●