Business Day
November 30, 2003

Baghdad: Iraq’s US-installed Governing Council has appealed to the international community to speed up the rescheduling of the towering debt accumulated by Saddam Hussein’s ousted regime. “The Governing Council calls on Iraq’s sovereign creditors and the international community to recognise the importance of urgently resolving Iraq’s external financial obligations and to rapidly advance the resolution process,” said a statement.

The statement especially urged the 19-member Paris Club, to which Iraq owes some 36% of its foreign debt, to help alleviate its financial burden.

The group aims to reach an agreement with Baghdad by the end of 2004, the deadline of its official moratorium on Iraq’s payments.

Iraq’s interim council also warned that “normal international banking relationships, which are vital for the recontruction of Iraq, will be impeded until the massive external debt accumulated by the previous regime is addressed.”

Iraq’s banking sector was nationalized in 1964 by the Arab nationalist regime that preceded that of Saddam. For the first time in 39 years, the Central Bank invited foreign banks last month to bid for a total of six operating licenses.

“The Governing Council further requests that the United States and its coalition partners lend advice and assistance to Iraq with respect to the rapid resolution of external financial claims,” concluded the statement.

Iraq’s foreign debt has been estimated at 120 billion dollars, according to the International Monetary Fund (IMF), with it obliged to pay another 100 billion dollars in reparations for the 1991 Gulf War.

The United States, since its April invasion of Iraq, has advocated substantial debt relief for the country, a proposal Iraq’s principal creditors are not warming to.

The Madrid international donors conference on Iraq aid held in Madrid last month largely skirted the issue of Baghdad’s debt.

AFP