U.S. Joins Other Creditors, Cancels Afghanistan Debts Owed to Paris Club Members
The United States welcomes the accord reached today by Afghanistan and its Paris Club creditors, including the United States, to cancel all debts owed by Afghanistan to Club members.
Today’s decision represents a great achievement for Afghanistan and reflects the international community’s acknowledgment of the great strides the country has made in strengthening its economy. Lifting the debt burden inherited by the Afghan government marks a crucial step on Afghanistan’s road to economic sustainability.
The accord reached today will implement Afghanistan’s completion point treatment under the Enhanced Heavily-Indebted Poor Countries Initiative. The accord also recognized Afghanistan’s performance under its International Monetary Fund (IMF) program and its progress on adopting and implementing economic reforms in a tremendously challenging environment.
Completion point, including today’s accord, will bring cancellation of an estimated $1.6 billion in debt from the Paris Club, IMF, World Bank and other creditors. It marks the end of a process that will ultimately result in a 96 percent reduction of the debt inherited by Afghanistan’s government, which was estimated at US$11.6 billion in 2006 (in net present value terms).
Since 2002, Treasury technical advisors have worked closely with the Afghan Ministry of Finance to streamline the budget process, improve the payment system for government employees, restructure Afghanistan’s debt, and establish a Debt Management Unit within the Ministry of Finance, which played a crucial role in today’s negotiations.