Paris Club to freeze debt for Tsunami-affected nations

By Reshmi Basu

New York, March 10 - Paris Club creditors have offered to freeze debt owed to them by tsunami-hit countries until the end of this year.

On Jan. 12, the Paris Club agreed in principle to provide debt relief but did not set the terms.

As part of the relief, deferred amounts would be repaid over five years with a one-year grace period.

"Moratorium interest accrued in 2005 will be capitalized and paid as the deferred amounts," the Paris Club said in a news release.

Furthermore, moratorium interest rates will be determined on a bilateral basis.

In December, a tsunami struck Indonesia, Sri Lanka, Thailand, India, Malaysia, Myanmar, the Maldives, Bangladesh and east Africa.

Formed in 1956, the Paris Club is an informal group of creditor governments from major industrialized countries.

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