Thursday, October 13, 2005

Italy cancels 80 percent of its Iraqi debt

Monday, October 10th 2005

The Government of Iraq announced that it has signed a bilateral agreement with Italy canceling the equivalent of $2.4 billion of Iraqi debt, amounting to 80 percent of Italy's claims against Iraq. The bilateral agreement implements the Agreed Minute concluded in November 2004 between Iraq and 18 Paris Club creditor countries.

This is the third bilateral agreement that Iraq has signed with its Paris Club creditors. In December of last year, the United States of America cancelled the entirety of its claims and Canada cancelled 80 percent of its claims against Iraq in June.

Prior to this agreement, the claims of the Italian government against Iraq totaled approximately $3 billion. When fully phased in, the agreement signed today will reduce this debt stock to approximately $600 million.

The debt reduction will take effect in three installments. Approximately $900 million will be cancelled immediately; a second installment of approximately $900 million of debt cancellation will automatically become effective upon the signing by Iraq of a formal stand-by arrangement with the International Monetary Fund (expected by the end of the year); and a final installment, equal to approximately $600 million, will automatically take effect upon completion of the stand-by arrangement.

The residual debt stock will be repayable over a 23-year period with six years of grace on principal payments. No principal or interest will be payable during the first three years.

"The conclusion of a bilateral agreement with the Italian government is another positive development for Iraq's debt management," said Iraq's Minister of Finance Ali A. Allawi.

"Iraq appreciates the constructive approach taken by Italy throughout the negotiations of this agreement."

Other Paris Club creditors of Iraq are Australia, Austria, Belgium, Denmark, Finland, France, Germany, Japan, the Republic of Korea, the Netherlands, Russia, Spain, Sweden, Switzerland and the United Kingdom. Bilateral agreements between Iraq and each of these countries are expected to be signed by the end of the year.

Taken from PortalIraq.com

Regards,

Marcel Heersema
Iraqi Dinar Opportunity

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