Republic of Guinea, Paris Club creditors reach deal to alleviate debt

By Caroline Salls

Pittsburgh, April 11 - The government of the Republic of Guinea has reached an agreement with Paris Club creditors to alleviate the country's external public debt following the Feb. 24 approval by the International Monetary Fund (IMF) of a new three-year arrangement under Guinea's extended credit facility, according to a news release.

In addition, creditors have agreed to defer and reschedule the repayment of maturities due by Guinea on short-term and post cut-off date debts over an eight-year period and to defer and reschedule the arrears on those claims over a three-year period.

The creditors have also agreed to defer all interest due on those amounts.

Participating creditors noted that, following the crisis that the Republic of Guinea has gone through, the government quickly revived economic activity and resumed negotiations with the Paris Club.

The agreement was concluded under the "Cologne terms" designed by the Paris Club for the implementation of the Heavily Indebted Poor Countries (HIPC) initiative interim debt relief, the release said.

According to the release, these measures are expected to reduce the debt service, including arrears, due from Guinea to Paris Club creditors between Jan. 1, 2012 and Dec. 31, 2014 by more than 84%.

This debt reduction corresponds to more than $344 million, of which more than $151 million was cancelled, the release said.

The country owed more than $750 million to Paris Club creditors as of Jan. 1.

Guinea's government has earmarked the resources freed up by this debt relief agreement to priority areas identified in the country's poverty reduction strategy.

The country's government has also committed to seeking comparable treatment from its private and non-Paris Club bilateral creditors.

The Paris Club said Guinea is implementing a reform program, which should allow it to complete the enhanced HIPC initiative as soon as possible and to obtain the final Paris Club creditors' debt relief component.

The members of the Paris Club that participated in the restructuring of the Republic of Guinea's debt were representatives of the governments of Austria, Belgium, Denmark, France, Germany, Italy, Japan, the Netherlands, Norway, the Russian Federation, Spain, the United Kingdom and the United States of America.

Brazil also participated in this reorganization.

The Paris Club is an informal group of creditor governments from major industrialized countries.

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