November 22, 2004: Paris Club Agrees to Forgive 80% of Iraqi Debts if It Implements IMF-Mandated Reforms

Rich creditor nations in the Paris Club announce they have reached a deal with the US on the proposed forgiveness of the $38.9 billion owed to those countries. The US wanted 95 percent of the debt canceled while the Paris Club was initially only willing to forgive 50 percent. Under the agreement, the Paris Club agrees to forgive 80 percent. Thirty percent of this will be forgiven immediately, followed by another 30 percent when Iraq agrees on a reform program with the International Monetary Fund, which it is expected to do in 2005. The remaining 20 percent will be canceled in 2008, after Iraq has implemented the reforms. The creditor countries owed the largest sums of money are Japan (4.1 billion dollars), France (2.9 billion), Germany (2.4 billion), the United States (2.2 billion), Britain (900 million), and Russia (9 billion). [St. Petersburg Times, 11/22/2004; Inter Press Service, 11/23/2004] The deal is denounced in a resolution passed by the Iraqi National Assembly on November 30. The resolution states that “the Paris Club has no right to make decisions and impose IMF conditions on Iraq.” It also says that nearly all of the debt is odious and should be canceled. [Inter Press Service, 11/23/2004; Iraqi National Assembly, 11/30/2004]