Paris Club reschedules $160 million of Georgia's debt

By Reshmi Basu

New York, July 22 - The Paris Club said it has restructured $160.6 million of external debt owed by the Government of Georgia, a move intended to support the country's economic reform initiatives.

Under the Poverty Reduction and Growth Facility program, the accord consists of rescheduling $160.6 million in debt, of which $12.7 million is Official Development Assistance debt, contracted by Georgia before Nov. 1, 1999.

The total is made up of interest on the rescheduled amounts and payments on the arrears, including late interest, and maturities falling between June 1, 2004 and Dec. 21, 2006.

The agreement will reduce debt to $46.4 million from $169.2 million.

"This debt restructuring will make an important positive contribution to Georgia's economic outlook," the Paris Club said in a news release.

The rescheduling of the maturities and 50% of the arrears is structured on the "Houston Terms," which provide eligible countries with access to Official Development Assistance loans. These are repaid over 20 years with a 10-year grace period. The remaining 50% of the arrears will be repaid over 3 years.

The International Monetary Fund estimated Georgia's debt to be $1.95 billion at the end of 2003. The debt owed to Paris Club creditors was estimated to be $525 million as of June 2004.

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

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