Central America Hurricane Disaster: Concerns Over Debt and Funding for

MEDIA RELEASE

Released By:
Downer

Australia welcomes the efforts of the large bilateral
creditors, such as France and Spain, concerning debt relief assistance for
Central America.

Australia is not a major creditor to any of the
affected countries, and is a supporter of existing debt relief
frameworks.

Only Nicaragua has a small sovereign debt with
Australia and that debt has already been rescheduled. In 1991, at Paris Club
negotiations on sovereign debt, Australia agreed to reschedule repayments,
extending the term to 25 years and agreeing to a 14-year grace period.
Nicaragua's debt to Australia is $A5.8 million on a 1986 loan for sugar cane
harvesting equipment.

Debt relief is a complex issue and if pursued, it is
important that in the longer term the continuation of sound policies is not
undermined.

There are already established multilateral frameworks
to deal with debt relief, including the Paris Club and the World Bank-IMF
Heavily Indebted Poor Countries Initiative. Australia is a strong supporter of
these and would encourage debt relief efforts to be undertaken within these
frameworks.

The storm has been the most devastating reported in
Central America this century and has caused widespread devastation.

In response, the Australian Government announced on 7
November a contribution of $1 million in immediate relief assistance, including
$500,000 to be directed through Australian non government aid organisations.

I am pleased to announce today that the $500,000
being channelled through Australian non-government aid organisations will be
distributed through World Vision and the Overseas Service Bureau. Both
organisations have experience in the region and will work with local
agencies.

The funds will contribute to the relief needs of
people affected by Hurricane Mitch in Honduras, Nicgaragua, El Salvador and
Guatemala, including the provision of emergency medical treatment; vaccination
campaigns; epidemic control; provision of clean water and repairing community
water systems; and, the purchase and provision of essential goods such as
clothing, blankets, water containers, plastic sheeting and medical supplies
.

The remaining $500,000 of Australia's contribution
will be provided through the United Nation's Office for the Coordination of
Humanitarian Affairs to support their efforts to improve urgently needed road
and transport capacity and through the International Federation of the Red Cross
to assist with basic health care.