BAGHDAD, Iraq, Aug. 18 /PRNewswire/ -- The Government of Iraq today
announced that it has signed a bilateral agreement with Romania canceling
approximately U.S.$2.0 billion, amounting to 80%, of Romanian claims against
Iraq.
    The accord is comparable to the agreement in principle concluded in
November 2004 between Iraq and the governmental creditors comprising the Paris
Club, which together hold a plurality of the total outstanding claims against
Iraq.  The Romanian accord is the first to be signed with Iraq's non-Paris
Club bilateral creditors.  The first agreement with a Paris Club creditor was
signed in December of last year.
    Prior to this agreement, the claims of the Romanian government against
Iraq totaled approximately U.S.$2.5 billion.  When fully phased in, the
agreement signed today will reduce this debt stock to approximately
$500 million.  The debt reduction will take effect in three installments.
Approximately $760 million will be cancelled immediately; a second installment
of approximately $760 million of debt cancellation will automatically become
effective upon the signing by Iraq of a formal stand-by arrangement with the
International Monetary Fund (expected during the fourth quarter of 2005); and
a final installment, equal to approximately $510 million, will automatically
take effect upon completion of a stand-by arrangement in 2008.  The residual
debt stock will be repayable over a 23-year period with 6 years of grace on
principal payments.  No principal or interest will be payable during the first
three years.
    "Today's agreement with Romania -- the first outside the Paris Club --
marks a significant step in Iraq's ongoing debt management program," said
Iraq's Minister of Finance Ali A. Allawi.  "Iraq appreciates Romania's prompt
and constructive approach to reaching this agreement."
    "The signature of an agreement today by the Romanian government, one of
Iraq's largest creditors, is consistent with its ongoing policy of support of
the difficult reconstruction process of a free and democratic society in Iraq,
paving the way for Iraq to contribute to international and regional security
and stability," said Mr. Dragos Neacsu, Secretary of State with the Ministry
of Public Finance.
    He added: "Romania considers this agreement as an important precedent for
the constructive resolution of the Iraqi debt towards countries that are not
members of the Paris Club. It also represents more than a financial
settlement, as it should trigger the re-launching of the business development
between our two countries."
    Iraq expects that similar bilateral agreements with governmental creditors
that are not members of the Paris Club will be signed over the remainder of
the year.
    Also, on August 8, 2005, Iraq made an offer to settle the first batch of
Saddam-era claims against the country held by commercial (non-governmental)
creditors.
    The total amount of Saddam-era claims against Iraq held by both bilateral
and commercial entities has been estimated at more than $125 billion.

Link to this page: