FRANCE: PARIS CLUB OF CREDITOR NATIONS AGREES TO CANCEL 80 PERCENT OF THE DEBT IRAQ OWES TO ITS MEMBERS

Record ID: 343212

  • Title: FRANCE: PARIS CLUB OF CREDITOR NATIONS AGREES TO CANCEL 80 PERCENT OF THE DEBT IRAQ OWES TO ITS MEMBERS
  • Date: 21st November 2004
  • Summary: (W7)PARIS, FRANCE (NOVEMBER 21, 2004) (REUTERS) (NIGHTSHOTS) 1. PAN DOWN: EXTERIOR FINANCE MINISTRY 0.07 2. WIDE OF PARIS CLUB CONFERENCE 0.11 3. IRAQI FINANCE MINISTER ADEL ABDUL MAHDI SIGNING BOOK 0.14 4. VARIOUS PARIS CLUB CONFERENCE (6 SHOTS) 0.45 5. (SOUNDBITE) (French) IRAQI FINANCE MINISTER ADEL ABDUL MAHDI
  • Embargoed: 6th December 2004 12:00
  • Keywords:
  • Location: PARIS. FRANCE
  • Country: France
  • Reuters ID: LVAAQGA8679BF8TMW4POTI1WFHE9
  • Story Text: A historic accord has been reached between Iraq and
    the Paris Club to cancel 80 per cent of the debt owed club
    members.


    The Paris Club of creditor nations agreed on Sunday
    (21 November) to cancel 80 percent of the debt Iraq owes
    its members, ending a trans-Atlantic dispute and probably
    setting the framework for debt pardons from other
    creditors.

    "This is a historic moment for Iraq, we waited for this
    moment for a long time, now that it's been achieved with
    the help of all our friends here present in the Paris Club,
    I think this will help in constructing Iraq and bring
    stability to the country and our neightbours as well as to
    the international community. We think Iraq will return back
    as a very positive partner in world's affairs. Iraq used to
    be a donor country and I think this agreement will help
    Irak not only to reconstruct itself but also once again to
    be a donor country helping other countries", said Adel
    Abdul Mahdi, Iraq's Finance Minister.

    Paris Club President Jean-Pierre Jouyet told reporters
    in Paris that the deal, which will slash Baghdad's debt to
    Club creditors to $7.8 billion from $38.9 billion, would be
    put into effect in three steps over the next four years.

    The deal came shortly after Russia, in talks on the
    sidelines of a meeting of Group of 20 developed and
    emerging market countries in Berlin, agreed to forgive up
    to 80 percent of Iraq's debt.

    Other creditors who are not in the Paris Club, but could
    now follow its lead, include Saudi Arabia, Kuwait and
    Eastern European states. The Club's members include most
    Western European states, Japan and Russia.

    "The Paris Club creditors have just signed an agreement on
    restructur
    ing Iraq's debt," Jouyet said after the
    negotiations.

    He said the Paris Club would pardon 30 percent of Iraq's
    debt to it immediately, an additional 30 percent in 2005
    and the final 20 percent in 2008.

    The final deal ended a dispute between the United States
    and France over how much of Iraq's debts they should waive,
    and could serve as a benchmark for relief deals with other
    creditors such as Saudi Arabia, Kuwait and Eastern European
    states.

    The United States had been pushing for a 90 percent to
    95 percent reduction, but France had argued that, with the
    world's second-largest oil reserves, Iraq should not be
    treated like impoverished African nations that lack such
    natural resources.

    Prior to the latest round of Paris Club talks, which
    began last week, France claimed the backing of Russia,
    Germany and Italy for its proposal that the Paris Club
    initially waive half of Iraq's debts and review the
    situation after three years.

    The agreement, which Washington wanted to give
    war-ravaged Iraq a chance to get on its feet, marked a step
    forward in trans-Atlantic relations after France, Germany
    and Russia all opposed the U.S.-led Iraq war.

    "It's a good arrangement for Iraq ... and it will also
    show how the world community can come together in a very
    cooperative way to address a problem," a senior U.S.

    official said.

    Earlier on Sunday, a source close to the Paris Club talks
    said the first tranche covered late interest payments, the
    second would pardon part of the principal owed and the
    third would waive the last tranche of principal.

    German Finance Minister Hans Eichel said in Berlin that
    he and United States Treasury Secretary John Snow agreed
    that the timing of the second and third tranches of the
    debt write-off would depend on Iraq respectively concluding
    and completing an economic program with the International
    Monetary Fund.

    A senior U.S. official said on Saturday Iraq's foreign
    debts had swollen to around $125 billion - from a prewar
    estimate by the IMF of $120 billion - and a third of that
    was owed to the 19 Paris Club countries.


    os/

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