Debt Relief Measures for the Republic of Iraq
November 24, 2005
- Based on the agreement reached at the conference of creditor countries (Paris Club) held in Paris on November 21, 2004 (Sun) concerning the treatment of the debt of the Republic of Iraq, negotiations were held between the Government of Japan and the Government of Iraq regarding debt relief measures (debt cancellation, deferral and rescheduling). As a result of the negotiations, both governments agreed upon the details of the conditions of debt relief. Notes to this effect were exchanged on November 24 (Thurs) at the Iikura House in Tokyo between Mr. Taro Aso, Minister for Foreign Affairs of Japan, and Mr. Hoshyar Mahmoud Zebari, Minister of Foreign Affairs of the Republic of Iraq.
- Content of the Debt Relief Measures
(1) Debts concerned
Certain debts that the Republic of Iraq owes to Japan Bank for International Cooperation (JBIC), and commercial debts insured by the Government of Japan. Japan ranks first among Paris Club creditor countries in terms of credit (approximate amount owed to other major creditor countries as of January 2004: France - 5,600 million dollars, Germany - 5,500 million dollars, U.S.A. - 4,000 million dollars, Italy - 3,800 million dollars, Russia - 3,500 million dollars, U.K. - 1,500 million dollars).(2) Total Amount of debts concerned: approximately 889,000 million yen (approximately 7,600 million dollars)
Breakdown (approximate amount):(A) JBIC-related debt: 83,000 million yen (B) Commercial debt: 806,000 million yen
(a) Debts contracted in Yen: 790,000 million yen
(b) Debts contracted in US dollars: 140 million dollarsNote: Out of the above debts, the amount of the debts contracted in US dollars is calculated at $1=116.53 yen (Tokyo Stock Exchange closing price on November 1, 2005).
(3) Debt Relief Method
The debts will be cancelled by 80% in total in three stages (amounting to a reduction of approximately 710,000 million yen, excluding rescheduling interest).- First stage: 30% cancellation after the signing of the Notes
- Second stage: increase the rate of cancellation to 60%, provided that the Government of Iraq agrees to the IMF program. The remaining debt stock will be rescheduled over a period of 23 years including a grace period of 6 years.
- Third stage: increase the rate of cancellation up to 80%, upon completion of the IMF's final review of the program
(4) Rescheduling Interest Rate
(A) Debts contracted in Yen: 2.571% per annum
(B) Debts contracted in US dollars: 4.854% per annum
Related Information (The Issue of Iraq)
Back to Index