- Djibouti could benefit up to seventy-nine (79) per cent in debt reduction following an agreement signed with Paris Club and government yesterday.
Agreement which follows International Monetary Fund's approval of Djibouti's arrangement under Poverty Reduction and Growth Facility last month, is expected to reduce debt service due to Paris Club creditors during IMF-supported programme from USD 85 million to USD 19 million.
Agreement states that approximately USD 76 million, of which USD 58 million comprises arrears and late interest will be dealt with, further stating that $64 million will be rescheduled while $12 millions will be deferred.
Reports said agreement was concluded under so called "Houston terms" with exceptional additional measures considering Djibouti's limited capacity of payment.
"This debt restructuring will make an important contribution to Djibouti's economic outlook. After comparable effort from other creditors, this rescheduling will satisfy Djibouti's financing needs for the next three years," a statement explained, further stating that, Djibouti is committed to seek comparable treatment from its non Paris Club creditors.
Members of Paris Club said to have participated in reorganisation of Djibouti's debt were representatives of governments of Belgium, France, Germany, Italy and Spain, while representatives of governments of Canada, Japan, the Netherlands, Norway, the Russian Federation, United Kingdom and United States of America, as well as IMF, International Development Association, African Development Bank and Secretariat of UNCTAD are said to have participated at meeting as observers.
Djibouti delegation was headed by Mr Simon Mibrathu, secretary general in ministry of economy, finance and planning and in charge of privatisation.
Djibouti's stock of debt owed to Paris Club creditors as of 1st August 2008 was estimated to be around $100 million in nominal terms, of which more than 60% consisted of arrears and late interest.
In accordance with Paris Club rules, credits granted after cut-off date are not subject to rescheduling or cancellation, however on an exceptional basis, creditors have also agreed to defer repayment of arrears accumulated by Djibouti on short-term and post cut-off date debts as well as all moratorium interest due during consolidation period on rescheduled amounts.
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