Iraq gets another 20% debt reduction from Paris Club

By Susanna Moon

Chicago, Dec. 22 - Paris Club creditors granted the Republic of Iraq's remaining 20% debt cancellation from the November 2004 agreement to provide debt relief.

This final debt treatment reduces debt due to Paris Club creditors to $7.8 billion.

Paris Club creditors agreed on a comprehensive debt treatment of public external debt with Iraq on Nov. 21, 2004 to provide debt reduction of 80% in three phases.

The first phase was Nov. 21, 2004 and the second phase Dec. 23, 2005. Together, they brought down the public external stock of debts due to Paris Club creditors by 60%.

The remaining third phase granting an additional 20% debt reduction was conditional upon completion by Dec. 31 of the last review of a three-year implementation of upper-credit tranche arrangements with the International Monetary Fund.

In this regard, Paris Club creditors said they took note of the approval by the IMF board of the second and last review of implementation by the Government of Iraq of the standby arrangement on Dec. 17.

Paris Club creditors consider that the Government of Iraq has made its best efforts to seek comparable treatment from all its other external creditors, with the conclusion of comparable debt treatments with 58 out of Iraq's 73 sovereign creditors.

Paris Club creditors urge the remaining 15 creditors of Iraq to follow suit.

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