The Finance Ministry has reached agreements with Japan and Belgium to write off more than $6,000 million of the estimated $39,000 million it still owes Paris Club members. Japan is the largest donor of the 19 Paris Club members.

Tokyo’s decision to write off 80 per cent of its estimated $7,300 million is likely to hasten similar agreements with other, larger creditor nations such as France and Russia. It will also pave the way for the resumption of Japanese financial assistance for the reconstruction effort. The agreement to write off the debt will be signed by the end of the year.

Brussels also announced on 31 October a bilateral protocol with the ministry to write off $312 million in Iraqi debt, some 80 per cent of its claims against Iraq. The first phase will see $117 million cancelled immediately. A second tranche of $117 million will be written off once Baghdad signs a formal stand-by arrangement with the IMF. The remainder, totalling about $78 million, will be paid back over 23 years and will include a grace period of six years with no interest payable during the first three.

The agreements are the latest to be signed by Paris Club members following similar deals struck with the US, Canada and Italy. In October Finance Minister Ali Allawi reaffirmed the countries’ debt totalled $200,000 million, including $55,000 million of compensation for Kuwait and $48,000 million to Saudi Arabia (MEED 21:10:05).