Paris Club to discuss tsunami relief

Paris Club finance officials who represent rich creditor nations are to discuss a possible freeze on debts owed by tsunami-affected countries.

    France's finance minister (R) said the Paris Club will freeze debt

    The proposal already has the support of several leading members, but questions remain over the terms of any deal on Wednesday due to the large sums owed.

    Indonesian debt alone is supposed to generate more than $3 billion in principal repayments to the Paris Club in 2005, and the tsunami-struck region should have generated a total of $5 billion.

    Some development lobby groups, including UK aid agencies Oxfam and Action Aid, have called on the Paris Club nations to write off the debt altogether.

    However, analysts suggest that Paris Club members may propose the concerned governments use their own financial resources to respond to the disaster rather than having to make debt payments.

    The G7 of leading industrialised nations, currently chaired by UK finance minister Gordon Brown, backed a freeze on repayments on Friday.

    Indonesian reaction

    Indonesia's foreign minister has already cautiously welcomed any promise of a debt moratorium, but said his country needed donations rather than new loans.

    Foreign Minister Hasan Wirajuda added on Monday that Indonesia expected Western creditors to allow it to freeze up to $3.2 billion in debt repayments until 2006 to deal with the disaster.

    That would amount to about one third of its $8.8 billion in scheduled repayments over the next two years to the group of sovereign creditors.

    SOURCE: Agencies


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