(Archived Content)
HP-495
Washington, D.C.--The United States and fellow Paris Club members Russia and Germany agreed Wednesday to provide additional debt relief to Afghanistan under the terms of the enhanced Heavily Indebted Poor Countries (HIPC) initiative. This agreement allows Afghanistan to benefit from debt reduction under the HIPC initiative of 92 percent, which is worth approximately $1 billion.
Under the HIPC framework, the three bilateral creditors will cancel 90 percent of the non-concessional debt payments Afghanistan would owe during its current IMF program, deepening the relief the three countries agreed to provide in the Paris Club in July 2006. The United States will go beyond the HIPC framework and forgive 100 percent of all debt payments falling due.
The debt relief follows a decision by the executive boards of the World Bank and IMF – with strong U.S. support – to declare earlier this month that Afghanistan had formally qualified for the HIPC initiative. To achieve this, the Afghan government had to adhere to the terms of its IMF program as well as meet certain other requirements. All remaining debt will be forgiven by the United States, Russia and Germany once Afghanistan reaches the completion point of its HIPC program. Total debt relief for Afghanistan will equal more than $11 billion, which represents more than 99 percent of its total debt.
It is a major achievement of the Afghan government to qualify for HIPC debt relief. This debt relief is a crucial step towards normalizing Afghanistan's relations with the international financial community and in helping Afghanistan move towards economic sustainability.
The United States urges Afghanistan's other bilateral creditors to join the Paris Club members by providing 100 percent debt reduction.