JEDDAH, 26 February — Saudi Arabia and Yemen have signed an agreement to reschedule SR935 million ($249 million) in Yemeni debts to the Kingdom, a Yemeni Finance Ministry official said in Sanaa yesterday.

He told Reuters that the two neighbors also signed a deal last week by which Saudi Arabia would extend $300 million in fresh loans to help finance a number of projects in Yemen, including roads and electricity projects.

The official said the rescheduling reduced the debt by 70 to 80 percent and extended repayment to 40 years.

The two agreements are due to be presented to the joint Yemen-Saudi Coordination Council which will meet in June. “The council is expected to approve these agreements and take the necessary measures for their implementation,” he said.

Relations between the two countries have been improving since they signed a border agreement in June last year, ending a long-running dispute which has occasionally erupted into clashes since the 1930s.

Yemeni Foreign Minister Abdul Qader Bajamal, while talking at a joint meeting of Saudi and Yemeni businessmen in Sanaa on Saturday, said the two countries should work toward economic integration. He also called on Saudi investors to enter into viable projects in Yemen.

Earlier yesterday, Yemeni President Ali Abdullah Saleh received the Saudi business delegation led by Ismail Abu Dawood, chairman of the Council of Saudi Chambers.

Addressing the delegation, Saleh said Saudi-Yemen relations were getting stronger, especially after the signing of the historic border treaty. He praised the directives of Custodian of the Two Holy Mosques King Fahd and Crown Prince Abdullah, deputy premier and commander of the National Guard, encouraging Saudi investment in Yemen and fostering partnership between the two countries.

Yemeni Prime Minister Dr. Abdul Karim Al-Iriyani also received the delegation.

Yemen has also announced that it will pull back a number of military units posted on the Saudi border next Wednesday as part of a redeployment plan agreed under the historic border treaty.

Yemen, one of the Arab world’s poorest nations, hopes that improved relations with Saudi Arabia, the world’s largest oil exporter and the region’s wealthiest economy, will boost investments and improve its general economic situation.

It is also seeking jobs for Yemenis in Saudi Arabia. Hundreds of thousands of Yemenis left the Kingdom during the 1990-91 Gulf crisis.