Paris Club reduces Ethiopia's debt by $934 million

By Reshmi Basu

New York, Oct. 15 - The Paris Club creditor countries finalized their recommendation to cancel $934 million of Ethiopia's debt as part of an initiative to provide relief to impoverished indebted nations.

On May 13, the Paris Club said it would recommend that their governments forgive the East African nation's debt as well as provide bilateral debt relief after the country reached its completion point under the Enhanced Debt Initiative for the Heavily Indebted Poor Countries (Enhanced HIPC Initiative).

The Paris Club members have cancelled $758 million of Ethiopia's external debt as well as provided $176 million in bilateral debt relief.

In total, Ethiopia's debt has been reduced to $153 million from $1.087 billion in net present value terms as of July 2003.

The decision reflects Ethiopia's commitment towards implementation of rigorous economic reforms, the Paris Club said in a statement.

The debt owed to Paris Club creditors as of April 2004 was estimated to be $1.899 billion. Ethiopia's external debt was estimated to be $6.845 billion in 2003, according to the International Monetary Fund.

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

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