MEDIA RELEASE
Released By:
Minister for Foreign Affairs The Hon. Alexander Downer and Treasurer Peter Costello
Treasurer Peter Costello and Minister for Foreign Affairs Alexander Downer are pleased to announce that the Australian Government is providing interim debt relief to Ethiopia. The announcement follows Ethiopia's qualification for
the World Bank and International Monetary Fund's Heavily Indebted Poor Countries
(HIPC) Initiative on 12 November 2001.
Accordingly, Ethiopia will not be required to make repayments to Australia on
its debt of $A11.5million, which is owing from a loan to assist with the
purchase of sugar cane processing equipment. Bilateral debt relief to
Ethiopia is expected to cost approximately $A1.2million this fiscal year
and $A2.4million each year thereafter. The debt will be forgiven in
full once Ethiopia completes the HIPC Initiative.
On 21 April 2000, Australia pledged 100 per cent bilateral debt forgiveness
to countries that qualify for debt relief under the enhanced HIPC
Initiative. The cost of this bilateral debt relief is additional to the
aid budget.
Ethiopia is the second country to receive bilateral debt relief from
Australia under the HIPC Initiative. Australia is no longer requiring
repayment of Nicaragua's bilateral debt after it qualified for HIPC assistance
in December 2000. Nicaragua's interim bilateral debt relief followed a
two-year moratorium on debt repayments that Australia granted Nicaragua in 1998
in the aftermath of Hurricane Mitch. There are no other countries that are
regarded as having unsustainable debt burdens and have outstanding liabilities
to Australia.
In addition to forgiving the bilateral debts held by countries that qualify
for HIPC assistance, Australia has committed $A55 million to assist the World
Bank and the IMF to provide debt relief.
The Australian Government is a strong supporter of the HIPC Initiative.
This comprehensive international strategy provides debt relief to the world's
poorest countries where these countries work to develop sound social and
economic policies and institutions, and to implement poverty reduction
frameworks. In this way, the HIPC Initiative strengthens the links between
debt relief and poverty reduction. By requiring countries to prepare
comprehensive, locally-owned poverty reduction strategies, the enhanced HIPC
Initiative ensures the proceeds of debt relief are directed towards basic
health, education and poverty reduction programmes, and not lost in corruption
or military spending.
Ethiopia is the 24th country to receive debt relief under the
enhanced HIPC Initiative. Total debt relief committed for these 24
countries amounts to $A70 billion.
Media Inquiries: Matt Francis (Ministerial) 02 6277 7500
Nicole Guihot (Department of Foreign Affairs) 02 6261
1555