Speaking at a ceremony in Washington to mark the announcement, outgoing US Secretary of State Colin Powell urged other countries to make similar gestures. 'Lifting the crushing burden of the old regime's debt is one of the most important contributions we can make to Iraq's new beginning,' said Powell. 'We urge other nations that are not Paris Club members to reach comparable agreements on Iraqi debt relief.'

Iraq's interim government is saddled with more than $120,000 million of debt accrued over the past 20 years, making debt relief one of its major priorities. A November decision by the 19-member Paris Club of sovereign international lenders to write off 80 per cent of the $39,000 million owed to them by Baghdad has helped the administration, although it still owes more than $80,000 to other countries (MEED 26:11:04).

The IBRD repayment clears the way for future lending by international institutions to aid reconstruction activity in the country. Baghdad's settlement of its arrears to the IMF in September has been followed by substantial loan and grant agreements from a number of international bodies (MEED 12:11:04; 5:11:04; 8:10:04).

In a related development, the Finance Ministry has posted a request for information (RfI) seeking information about commercial claims outstanding against local obligors, including financial institutions. Ernst & Youngis the ministry's reconciliation agent for the process.