WASHINGTON, 18 December 2004 — The United States yesterday formally wrote off all of its $4.1 billion in Iraqi debt and urged other nations to follow suit as a critical move for the country’s reconstruction. Secretary of State Colin Powell, Treasury Secretary John Snow and Iraqi Finance Minister Adil Abd Al-Mahdi signed the accord formalizing the US commitment made to the Paris Club of Iraqi creditors last month. The group of 19 creditors agreed to cancel 80 percent of the approximately $40 billion (30 billion euros) in debt owed them by the ousted regime of Saddam Hussein. Washington went further and agreed to wipe out all of its share. Powell and Snow called on countries outside the Paris Club to provide a similar lifeline to the administration in Baghdad, which took office facing a total of $127 billion in debt, according to Mahdi.
“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,” Powell told the signing ceremony in the State Department’ ornate Benjamin Franklin room.
“This a tremendous victory, this is a victory for the Iraqi people,” he said. “We urge other nations who are not Paris club members to reach comparable agreements on Iraqi debt relief.” Snow called the debt relief measure “another critically important milestone on the path to prosperity in Iraq” but added that “it’s clear more is needed.” He said the United States stood ready to help other countries reach debt-cancellation accords. Iraq’s Paris Club of creditors, which includes the United States, Japan, Russia and EU nations, agreed on Nov. 21 to gradually wipe out 80 percent of the money it was owed.
It said the accord, which would reduce Iraq’s debt to the club to about $7.8 billion in three years, was intended to ensure Iraq’s “long-term debt sustainability.”