Liberia to restructure debt in accordance with Paris Club creditors

By Susanna Moon

Chicago, April 18 - In the Republic of Liberia, the government agreed with Paris Club creditors on April 17 to restructure its external public debt under the Heavily Indebted Poor Countries (HIPC) initiative, according to a news release.

Under the agreement, $254 million of debt would be immediately canceled.

According to the release, the agreement was concluded under the so-called Cologne terms, designed by the Paris Club for the implementation of the HIPC initiative interim debt relief.

Considering Liberia's limited capacity for payment, and provided the country continues to implement an International Monetary Fund-supported program, Liberia is exempted from payments between March 1, 2008 and Dec. 31, 2010.

Several creditors intend on a bilateral basis to grant additional debt relief to Liberia beyond the terms set forth in the Paris Club agreement, the release said.

Liberia would devote the resources that would have gone to Paris Club creditors to priority areas identified in the country's poverty reduction strategy paper, the release noted.

Liberia seeks comparable treatment from non-Paris Club creditors.

By the completion of the HIPC initiative, the IMF and the World Bank estimate the Paris Club will have delivered total debt relief of about $1.3 billion in net present value terms.

The Paris Club is an informal group of creditor governments from major industrialized countries, including Belgium, Denmark, Finland, France, Germany, Italy, Japan, the Netherlands, Norway, Sweden, Switzerland, the United Kingdom and the United States.

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