Paris Club reduces Kyrgyz Republic debt by $124 million

By Reshmi Basu

New York, March 11 - The Paris Club creditor countries said they would reduce Kyrgyz Republic's debt by $124 million as part of an initiative to help the country restore the sustainability of its public debt.

The agreement cancels $124 million of loans and credits contracted by the country before Aug. 31, 2001. The Paris Club is also rescheduling $431 million of debt.

The Paris Club cancelled 50% of commercial credits. The remaining debt shall be repaid over 23 years, with a seven-year grace period. Official development assistance (ODA) credits are to be repaid over 40 years, with a 13-year grace period.

Under the debt treatment, moratorium interest shall be capitalized at 85% in 2005, 75% in 2006, 70% in 2007 and 65% in 2008. The interest payments shall be repaid over 23 years, with a seven-year grace period.

The International Monetary Fund estimated that the nation's public debt was $1.920 billion at the end of September 2004.

The amount of debt owed to Paris Club creditors was estimated to be $555.1 million as of Feb. 1, 2005. That debt is divided into $306.3 million in ODA claims and $248.8 million in non-ODA claims.

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

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