The Paris Club of mainly western creditor nations have agreed to cancel 758 million US dollar (4,5 milliarder DKR) of Ethiopian debt to help cut poverty and stimulate growth. The debt write-off is part of the Heavily Indebted Poor Countries initiative (HIPC), launched in 1996 to ease the burden on the worlds poorest countries, reports IRIN Wednesday.
Ethiopias external public sector debt was estimated in 2003 by the International Monetary Fund at 6,8 billion US dollar, of which the Paris Club nations were owed 1,89 billion dollar as of April 2004. The write-off came as the Ethiopian government launched concerted efforts through its diplomats overseas to gain greater debt relief.
According to the Ministry of Finance and Economic Development, Ethiopia allocates up to 100 million dollar a year in debt servicing. The Paris Club said in a statement on Friday that Ethiopias outstanding (udestående/ubetalte) debt now totalled 153 million US dollar.
– Paris Club creditors welcomed Ethiopias determination to implement a broad-based and rigorous economic program which should provide the basis for sustainable economic growth and comprehensive poverty reduction, the statement added.
Representatives of Australia, Austria, Belgium, Finland, France, Germany, Italy, Japan, the Netherlands, the Russian Federation, Sweden, the United Kingdom and United States struck the deal.
The African Development Bank also agreed on Friday to wipe out 339,5 million US dollar in Ethiopian debts.
– Ethiopia will be released from up to 80 percent of annual debt service to the Bank Group until the entire amount is delivered, the bank said. It added that interest repayments would fall from 41,33 million to about 11 million dollar as a result of the deal.
The bank added that it had also agreed a loan of 88 million dollar to Ethiopia to support the governments poverty reduction strategy.
– Hard-hit by drought, famine, epidemics and wars, Ethiopia remains one of the poorest countries in the world, the bank said.
Kilde: FN-bureauet IRINnews
