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Paris Club reduces Congo's debt by $1.57 billion
By Reshmi Basu
New York, Dec. 16 - The Paris Club creditor countries said they would reduce the Republic of Congo's debt by $1.57 billion as well as reschedule $1.45 billion of debt under the Poverty Reduction and Growth Facility of the International Monetary Fund.
Paris Club members agreed on the debt reduction plan, citing the West African nation's economic and financial recovery efforts for the last two years.
The total amount of debt cancelled and rescheduled amounts to $3.02 billion, which consists of arrears as of Sept. 20, 2004 and debt due between Oct. 1, 2004 and Sept. 30, 2007.
The agreement is structured under the Naples terms, which include a pre-cut off date for official development assistance credits. Those credits are to be repaid over 40 years with a 16-year grace period. Of pre-cut date commercial credits, 67% will be cancelled. The remaining amounts will be rescheduled over 23 years with a six-year grace period at appropriate market rates.
The cut-off date for the Congo is Jan. 1, 1986.
The debt reduction plan will reduce the debt owed to the Paris Club to $770 million from $3.73 billion.
Furthermore, Paris Club members agreed to accelerate the cancellation rate to 90% as soon as the country has reached the decision point under the enhanced debt initiative for Heavily Indebted Poor Countries.
The government of the Republic of Congo said it will seek comparable treatment from its other external creditors.
The International Monetary Fund estimated that the nation's public debt is $8.57 billion at the end of 2003. The debt owed to the Paris Club is estimated to be $4.69 billion as of Sept. 30, 2004.
Formed in 1956, The Paris Club is an informal group of creditor governments from major industrialized countries.
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