Reuters
October 5, 2004

Washington: Iraq hopes to reach a debt forgiveness deal with leading creditor nations by the end of the year, and views an offer by France to initially relieve only 50 percent of its debt as just a “starting point,” Iraqi Finance Minister Adil Abdul Mahdi said on Tuesday.

“What we are saying is we want a cut off of 95, 90-95 percent. That’s why there is negotiations,” Mahdi told reporters after a signing ceremony to make a $500 million credit program from the U.S. Export-Import Bank operational.

The United States also wants a 90-95 percent debt write-off for Iraq’s debt load of $120 billion. But it has faced opposition from France, who argues that Iraq should not expect the same treatment as impoverished African nations since it has the world’s second largest oil reserves.

France, which is the host country for the 19-member Paris Club of creditor nations, has proposed forgiving just half of Baghdad’s debt and revisiting the issue in three years.

“This is a starting point. I don’t think this will be their definite, their final decision,” Mahdi said.

Iraq needs all of its oil revenues to help rebuild the country and a comprehensive debt relief package to provide certainty for investors, he said.