Paris Club Grant $758 million debt Relief for Ethiopia

Paris Club Grants Debt relief to Ethiopia
In a bid to restore Ethiopia's debt sustainability, the Paris Club creditors of which the United Kingdom is a member, promised to cancel US$ 758 million of Ethiopia's debt. Most creditors also committed on a bilateral basis to grant additional debt relief to Ethiopia so that the stock of the debt owed to Paris Club creditors will be reduced by a further US$ 176 million. In total, Ethiopia's debt to Paris Club creditors has been reduced from US$ 1087 million to US$ 153 million as a result of this agreement and additional bilateral assistance.

In Detail
The representatives of the Paris Club creditor countries met on October 13, 2004 and signed the recommendation to their Governments initiated on May 13, 2004 for cancellation of Ethiopia's external debt. In order to contribute to restore Ethiopia's debt sustainability, they committed to cancel US$ 758 million in July 2003 which represents the Paris Club's share of the effort in the framework of the Enhanced HIPC Initiative.

Most creditors also committed on a bilateral basis to grant additional debt relief to Ethiopia so that the stock of the debt owed to Paris Club creditors will be reduced by a further US$176 million. Ethiopia has had to implement a broad-based and rigorous economic program which (according to the Paris Club) should provide the basis for sustainable economic growth and comprehensive poverty reduction. Ethiopia committed to allocate the resources freed by debt relief to priority areas identified in the country's poverty reduction strategy and to seek comparable treatment from all its other external creditors (including other creditor countries as well as commercial creditors).

What is the Paris Club?
The Paris Club is an informal group of creditors whose role is to find co-ordinated solutions to the payment difficulties experienced by debtor nations. Paris Club creditors agree to reschedule debts owed to them.
For more information on the Paris Club please visit: http://www.clubdeparis.org/en/presentation/presentation.php?BATCH=B01WP01