- The Paris Club of creditors have today agreed to cancel the debt of the government of the Republic of Côte d'Ivoire.
"This agreement has been concluded under the so called "Cologne terms" designed by the Paris Club for the implementation of the HIPC initiative interim debt relief. This leads to the immediate cancellation of USD 845 million," the group said in a statement today.
The decision, which comes after the country annouced an election date of 29 November, following numerous postponements and concerns over the peace settlement in the divided country, will will ease Côte d'Ivoire's burden under the enhanced initiative for the Heavily Indebted Poor Countries (enhanced HIPC Initiative).
"On an exceptional basis, considering Côte d'Ivoire's limited capacity of payment, and provided that this country continues to implement satisfactorily its IMF supported programme, creditors have also agreed to defer the repayment of the arrears accumulated by Côte d'Ivoire on post cut-off date debts, as well as maturities falling due during the consolidation period under the post cut-off date debts and the moratorium interest due during the consolidation period on the rescheduled and deferred amounts. The repayment of most of these amounts will start after April 2012," the Paris Club said.
The statement further said the agreement is expected to reduce debt service due to Paris Club creditors during the IMF supported programme from USD 4692 million to USD 391 million, representing a reduction of 92 percent.
Several creditors are also said to intend on a bilateral basis to grant additional debt relief to Côte d'Ivoire beyond the terms set today in the Paris Club agreement.
Accordint to the Club, Côte d'Ivoire is committed to devote these resources to priority areas identified in the country's poverty reduction strategy paper, further saying the country is also committed to seek comparable treatment from its private and non Paris Club bilateral creditors.
Paris Club creditor countries expressed their commitment to implement the final component of debt relief contemplated under the enhanced HIPC initiative, as soon as Côte d'Ivoire reaches the Completion Point.
The members of the Paris Club which participated in the reorganisation of Côte d'Ivoire's debt were representatives of the governments of Austria, Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Norway, Spain, Switzerland, the United Kingdom and the United States of America. Brazil also participated in this reorganisation, the statement said.
Observers at the meeting were representatives of the governments of Finland and the Russian Federation, as well as the International Monetary Fund, the International Development Association and the African Development Bank.
Côte d'Ivoire's economic program is supported by a three year arrangement under the Poverty Reduction and Growth Facility approved by the International Monetary Fund on 27 March 2009. Côte d'Ivoire reached the decision point under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative in March 2009.
The stock of Côte d'Ivoire's debt owed to the Paris Club creditors as of 1st January 2009 was estimated to be approximately US$ 7.21 billion in nominal terms, of which 42 percent consisted of debt granted after the cut-off date, which is the 1st July 1983.
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