Thursday, March 18, 2010
Accord to cancel Afghan debt
From The Hindu
The United States and other countries belonging to the Paris Club of creditors on Wednesday agreed to cancel debt owed by Afghanistan to its members. “Today's decision represents a great achievement for Afghanistan and reflects the international community's acknowledgment of the great strides the country has made in strengthening its economy”, said the U.S. State Department.
While the U.S. said lifting the debt burden inherited by the Afghan government marked a crucial step on Afghanistan's road to economic sustainability, the Paris Club added that Afghanistan had committed to allocate the resources freed by the present debt relief to priority areas identified in the country's poverty reduction strategy and to achieve Millennium Development Goals.
With the accord signed, Afghanistan, a member of the enhanced Heavily-Indebted Poor Countries (HIPC) Initiative, would see the implementation of “completion point treatment,” said the State Department. This implies the cancellation of an estimated $1.6 billion in debt from the Paris Club, as well as the IMF, World Bank and other creditors. As per the debt relief plan, this process will ultimately result in a “96 per cent reduction of the debt inherited by Afghanistan's government,” which was estimated at $11.6 billion in 2006.
After the debt cancellation, the Paris Club said it welcomed Afghanistan's commitment “to seek comparable treatment from all their other external creditors including other creditor countries”. Afghanistan further won praise from the Paris Club for its performance under an International Monetary Fund programme and its progress on implementing economic reforms in a “tremendously challenging” environment.
The breakthrough for Afghanistan comes after years of careful debt and macroeconomic management — since 2002 technical advisors worked with the Afghan Ministry of Finance to streamline the budget process, improve the payment system for government employees, restructure Afghanistan's debt, and establish a Debt Management Unit within the Ministry of Finance, according to official reports.
The Paris Club was formed in 1956. It is an informal group of creditor governments from major industrialized countries. The members of the Paris Club that participated in the restructuring of Afghanistan's debt were Germany, Russia and the U.S.
The United States and other countries belonging to the Paris Club of creditors on Wednesday agreed to cancel debt owed by Afghanistan to its members. “Today's decision represents a great achievement for Afghanistan and reflects the international community's acknowledgment of the great strides the country has made in strengthening its economy”, said the U.S. State Department.
While the U.S. said lifting the debt burden inherited by the Afghan government marked a crucial step on Afghanistan's road to economic sustainability, the Paris Club added that Afghanistan had committed to allocate the resources freed by the present debt relief to priority areas identified in the country's poverty reduction strategy and to achieve Millennium Development Goals.
With the accord signed, Afghanistan, a member of the enhanced Heavily-Indebted Poor Countries (HIPC) Initiative, would see the implementation of “completion point treatment,” said the State Department. This implies the cancellation of an estimated $1.6 billion in debt from the Paris Club, as well as the IMF, World Bank and other creditors. As per the debt relief plan, this process will ultimately result in a “96 per cent reduction of the debt inherited by Afghanistan's government,” which was estimated at $11.6 billion in 2006.
After the debt cancellation, the Paris Club said it welcomed Afghanistan's commitment “to seek comparable treatment from all their other external creditors including other creditor countries”. Afghanistan further won praise from the Paris Club for its performance under an International Monetary Fund programme and its progress on implementing economic reforms in a “tremendously challenging” environment.
The breakthrough for Afghanistan comes after years of careful debt and macroeconomic management — since 2002 technical advisors worked with the Afghan Ministry of Finance to streamline the budget process, improve the payment system for government employees, restructure Afghanistan's debt, and establish a Debt Management Unit within the Ministry of Finance, according to official reports.
The Paris Club was formed in 1956. It is an informal group of creditor governments from major industrialized countries. The members of the Paris Club that participated in the restructuring of Afghanistan's debt were Germany, Russia and the U.S.
Labels: Afghanistan, debt, Paris Club, United States
# posted by Narayan Lakshman @ 4:59 PM 
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