Paris Club agrees on debt relief for Guyana
Paris Club creditors and Trinidad and Tobago have agreed to be a part of the Heavily Indebted Poor Countries (HIPC) initiative debt relief package for Guyana and are willing to be a part of the further relief the Cologne Initiative can offer Guyana. The HIPC initiative has yielded some US$253 million in debt relief for Guyana in net present value terms and participation by the Paris Club and Trinidad has concretised a 25 per cent reduction in annual bilateral debt service equivalent to US$6 million per year. The Paris Club creditors met in France on Thursday and Friday and agreed to a stock of debt reduction for Guyana, moving from the Naples terms of 67 per cent in 1996 to 80 per cent under the HIPC initiative. The bilateral creditors have also agreed to include in Guyana's debt relief package, a voluntary debt swap facility of up to 20 per cent of the stock of debt of each creditor country. A press release from the Paris Club, via the Ministry of Finance, said that the debt treatment can come as: * a write-off of 80 per cent on the stock of debt under eligible loans and credits with the remaining parts being consolidated at market interest rates over 23 years inclusive of a six-year grace period; * the consolidation at concessional rates so as to reduce by 80 per cent the net present value the payments due on eligible loans and credits. Either way, US$6 million is released each year from debt service and is to be used for increased government expenditure on education, health and poverty alleviation programmes. The release noted that since 1996, the debt due by Guyana to Paris Club creditors had been reduced by more than US$700 million, which is broadly equivalent to Guyana's Gross Domestic Product (value of goods and services produced within Guyana). Annual debt service, the release said, had been reduced from over US$70 million to about US$13 million. The press release said the representatives welcomed the determination expressed by Guyana's Minister of Finance to implement a comprehensive and rigorous economic programme which should provide the basis for sustained economic growth. "In the aftermath of the Cologne G7 summit, the Boards of the IMF and the World Bank shall decide in 1999 an enhancement to the Heavily Indebted Poor Countries initative. In this framework, the creditor countries expressed their readiness to reconsider the situation of Guyana and to reduce further, if necessary, the stock of its debts in order to ensure its sustainability," the release said.
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