Peter Costello

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Australia Forgives Ethiopia's Debt

NO.098

JOINT PRESS RELEASE

TREASURER
AND
MINISTER FOR FOREIGN AFFAIRS AND TRADE
AND
MINISTER FOR TRADE

 

AUSTRALIA FORGIVES ETHIOPIA’S DEBT

The Treasurer, the Hon Peter Costello MP, the Minister for Foreign Affairs, the Hon Alexander Downer MP and the Minister for Trade, the Hon Mark Vaile MP, are pleased to announce that the Australian Government has forgiven Ethiopia’s bilateral debt to Australia of $7.9 million.

This announcement follows a recent determination by the International Monetary Fund (IMF) and the World Bank that Ethiopia has undertaken all steps necessary under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative to be afforded debt forgiveness.

On 21 April 2000, the Australian Government pledged 100 per cent bilateral debt forgiveness to countries that qualified for debt relief under HIPC. Ethiopia is the second country to receive such bilateral debt forgiveness from Australia, the cost of which is in addition to the aid budget.

Australia supports the enhanced HIPC Initiative as one way of effectively addressing the unsustainable debt burdens of the world’s poorest, most heavily indebted countries. Twenty seven countries have now benefited from the initiative, qualifying for over US$55 billion in debt relief, which amounts to nearly two thirds of their total stock of external debt in net present value terms.

The HIPC framework requires countries to prepare comprehensive, locally owned poverty reduction strategies and ensures that the proceeds of debt relief are directed towards basic health, education and poverty reduction programmes. Ethiopia is committed to devoting the resources freed by the forgiveness of its debts to the social sectors, such as health and education, and investment in infrastructure.

Australia’s decision to forgive this debt formally follows Ethiopia’s qualification for HIPC assistance in November 2001. Since that time Ethiopia has not been required to service its debt to Australia pending it reaching the final stage of the HIPC process.

In addition to forgiving bilateral debts owed to Australia by countries that qualify for HIPC assistance, the Australian Government has committed $77 million to date to assist the World Bank and the IMF to provide debt relief through the HIPC Initiative.

MELBOURNE
15 November 2004

Contact:

Amanda Kennedy
Treasurer’s Office
02 6277 7340 or
0418 868 710
Chris Kenny
Mr Downer’s Office
02 6277 7500 or
0419 206 890
Matthew Doman
Mr Vaile’s Office
02 6277 7420 or
0418 273 475

 

15 Nov 2004

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