03/11/2005, 00.00
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NGO cries foul as Paris Club set to penalise tsunami-stricken countries

Paris Club's solidarity means that interest run up on delayed debt repayments by Indonesia and Sri Lanka during 2005 moratorium is to be capitalised and repaid as deferred payments.

Paris (AsiaNews/Agencies) – The decision by the Paris Club of creditor countries to give tsunami-stricken Indonesia and Sri Lanka a moratorium on their debt is scandalous and cynical, this according to the Committee for the Abolition of the Third World Debt (CADMT), a Franco-Belgian NGO. But despite the group's outrage, Sri Lanka has accepted the offer to freeze its debt payments. Hardest-hit Indonesia has instead said it was sceptical.

For CADMT, far from a display of generosity the offer is scandalous and evidence of the Paris Club's cynicism. Not only does it not cancel any portion of the debt the two tsunami-battered countries owe, but it proposes that the delayed payments be repaid over 5 years, interests included.

In a statement released today, the group said that since the "interest run up during the moratorium in 2005 is to be capitalised and repaid as deferred payments [and] the interest rate for overdue payments will be decided bilaterally, [the] Paris Club is taking advantage of the fact that the tsunami is no longer in the headlines. [In doing so, it is] violating the memory of the dead and missing people".

Compare this to January when the Paris Club pushed the right buttons claiming to be fully aware of "the exceptional dimension and devastation of the catastrophe. In fact, it was all talk," the CADMT's statement read. For the Franco-Belgian NGO, what is really needed is the total cancellation of the foreign debt of tsunami-affected countries.

In Sri Lanka, the government has welcomed the Paris Club's concession. "We are very grateful for this decision, which will help us to tide over the immediate difficulty, [but] we would like [. . .] the G8 to extend this to even 2006 and 2007," Sri Lanka's Finance Minister Sarath Amunugama said.

Indonesia has not however been as welcoming to the moratorium offer. "From a cash flow point of view it would be very hard on us. It would only increase our burden," Mulia Nasution, a director-general at the Finance Ministry, said.

Sri Lanka, whose foreign debt stands at US$ 8.8 billion, has estimated that reconstruction will cost US$ 1.8 billion.

Indonesia, which owes about US$ 48 billion to Paris Club lenders, estimates that reconstruction and rehabilitation will cost US$ 1.1 billion this year and US$ 5.5 billion over the next five years. (LF)

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