Iraq's Odious Debts

Switzerland cancels 80% of its Iraqi debt

Business Wire

December 22, 2005

Baghdad, Iraq: The Government of Iraq today announced that it has signed a bilateral agreement with Switzerland canceling the equivalent of $US230 million* of Iraqi debt, amounting to 80% of Switzerland’s claims against Iraq. The agreement with Switzerland was signed on December 21, 2005. The bilateral agreement implements the Agreed Minute concluded in November 2004 between Iraq and eighteen Paris Club creditor countries.
Iraq has already signed similar bilateral agreements with Canada, Italy, Belgium, Japan, Austria, France and Denmark earlier this year, and the United States cancelled 100% of its claims against Iraq in December 2004.
 
Prior to this agreement, the claims of the Swiss government against Iraq totaled approximately $US288 million. When fully phased in, the agreement signed today will reduce this debt stock to approximately $US58 million. The debt reduction will take effect in three installments. Approximately $US86 million was cancelled at the time of signing the bilateral agreement; a second installment of approximately $US86 million of debt cancellation will automatically become effective upon the conclusion of a stand-by arrangement between Iraq and the International Monetary Fund (expected by the end of the year); and a final installment, equal to approximately $US58 million, will automatically take effect upon the final review of a three-year implementation of stand-by arrangements. The residual debt stock will be repayable over a 23-year period with 6 years of grace on principal payments. No principal or interest will be payable during the first three years.
 
“Iraq appreciates the constructive approach taken by Switzerland throughout the negotiations of this agreement,” said Iraq’s Minister of Finance Ali A. Allawi. “Iraq welcomes the conclusion of another bilateral agreement implementing the Paris Club Agreed Minute.”
 
The other countries comprising the Paris Club creditors of Iraq are Australia, Finland, Germany, the Republic of Korea, the Netherlands, Russia, Spain, Sweden and the United Kingdom. Bilateral agreements between Iraq and each of these countries are expected to be signed in the coming weeks.
 
* Using the exchange rate as of the date of the Agreed Minute (US$1 = CHF1.1625)

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