Iraq's Odious Debts

US urges others to reduce Iraq’s debt

December 17, 2004

Washington: The United States will try to convince more of Iraq’s creditors to forgive the country’s debt, Treasury Secretary John Snow said on Friday.

Snow called a debt reduction deal between the Paris Club of creditor nations and Iraq a good first step, but said more needed to be done to foster economic development in Iraq. Snow signed the U.S. portion of the agreement at a ceremony at the State Department.

“The U.S. is therefore ready to assist the Iraqis in implementing the Paris Club agreement, including seeking comparable treatment from sovereign creditors who do not participate in the Paris Club,” he said in text prepared for delivery.

The Paris Club agreed last month to cancel 80 percent of the debt Iraq owes its members.

The agreement, 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 Paris Club’s 19 members include the Group of Seven industrialized countries – the United States, Japan, Canada, Germany, Britain, France and Italy – as well as other Western European states, Russia and Australia.

Other creditors who are not in the Paris Club but could follow its lead include Saudi Arabia, Kuwait and Eastern European states.

Under the deal, the Paris Club nations will immediately cancel 30 percent of the debt owed to them by Iraq.

An additional 30 percent waiver would follow in 2005 once an economic program with the International Monetary Fund (IMF) is approved. A further 20 percent would be pardoned in 2008 after a review of the implementation of the IMF economic program.

The United States is forgiving 100 percent of the $4.1 billion Iraq owes it, the Treasury Department said in a statement.

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