Paris Club agrees to freeze Asian debt

Paris (AsiaNews/Agencies) - The Paris Club of rich creditor governments agreed yesterday to offer a temporary debt moratorium to countries affected by the tsunamis, but said only three nations had expressed interest. The Paris Club of 19 creditor nations, said it was willing to freeze payments until the end of 2005, depending on assessments from the World Bank and the International Monetary Fund, which would monitor the countries to make sure that the money was being used for tsunami relief. This temporary halt of repayments could free billions of dollars for rebuilding over the next year.

So far, only Indonesia, Sri Lanka and Seychelles had declared an interest in the moratorium, and none had actually applied for the suspension, chairman of the club Jean-Pierre Jouyet said. The major industrialized nations in the club believed "that a moratorium is completely indispensable to allow those countries affected to surmount their immense difficulties," French Finance Minister Herve Gaymard said.

Indonesia will receive the biggest benefit from the moratorium - its payments, without the freeze, would be billion this year. Indonesia's foreign minister, Hassan Wirajuda, said his country was "perfectly grateful" for the proposal but suggested cash aid was more important.

Other countries, including Thailand, "do not wish to accept this moratorium simply because they have lower debt levels than the others and do not want to degrade their standing in the international financial markets," Gaymard said. The offer was also extended to Myanmar, India, Malaysia, the Maldives, Somalia and Thailand, Jouyet said.

A small group of protesters demonstrated outside the meeting, demanding that the Paris Club cancel the debt of tsunami affected countries rather than just suspend repayments. Some members of the Paris Club had also favored that approach.

Paris Club's total outstanding debt from all nine countries affected by the offer amounts to US billion. The Paris Club comprises Austria, Australia, Belgium, Britain, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, Russia, Spain, Sweden, Switzerland and the United States.

Finance ministers from the wealthy G7 nations have already agreed to a debt freeze for all tsunami nations.

Nearly 160,000 people were killed by the tsunami, which was triggered by a huge earthquake off the Indonesian island of Sumatra. More than half a million people are believed to have beeninjured and up to 5 million are classified as lacking basic services.