Military

10 March 2005

Tsunami Countries Offered Debt Repayment Freeze Through 2005

Major creditor nations meet in Paris, agree on terms of offer

The Paris Club has announced that countries affected by the Asian tsunami crisis may halt debt repayments to major creditor nations represented by the group through December 31 so as to devote more resources to humanitarian and reconstruction efforts.

In a March 9 communiqué, the Paris Club said that its 19 members had agreed to the offer during a meeting in Paris at which they studied an analysis of the post-tsunami situation by the International Monetary Fund and the World Bank.

The Paris Club comprises Austria, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Great Britain, Ireland, Italy, Japan, the Netherlands, Norway, Russia, Spain, Sweden, Switzerland and the United States.

The Paris Club agreed in principle on a payment freeze on January 12, just over two weeks after the December 26, 2004, tsunami, but did not set terms other than an initial three-month freeze on debt repayments for interested countries.

Under the new agreement, countries affected by the tsunami may halt debt payments for one year, with repayment of the deferred amounts to be scheduled over a five-year period.

The tsunami killed or left missing an estimated 300,000 people in Indonesia, Sri Lanka, Thailand, India, Malaysia, Myanmar, the Maldives, Bangladesh and east Africa.  In addition, hundreds of thousands of people lost their homes.

For additional information on the overall aftermath of the Indian Ocean tsunami, see U.S. Response to Tsunami.

Following is the text of the Paris Club communiqué:

(begin text)

Paris Club
[Paris, France]
9 March 2005

Following their meeting on January 12, 2005 where Paris Club Creditors announced that, considering the devastating effects of the tsunami and in order to allow those countries to dedicate all resources to address humanitarian and reconstruction needs, they were not expecting any debt payment from tsunami affected countries until the IMF [International Monetary Fund] and the World Bank have made a full assessment of the needs, Paris Club Creditors further discussed the situation of those countries on March 9, 2005.

On the basis of the analysis of the situation made by the IMF and the World Bank, and for debtor countries that have declared their interest, Paris Club Creditors, consistent with the national laws of the creditor countries, have agreed not to expect any debt payment on eligible sovereign claims from those countries until December 31, 2005.

They offer that the deferred amounts be repaid over 5 years of which 1 year of grace. Moratorium interest accrued in 2005 will be capitalized and paid as the deferred amounts. The moratorium interest rates will be determined on a bilateral basis.

Paris Club creditors expect that the resources freed by this measure will benefit directly the people affected by the tsunami.

(end text)

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)