By Merle David Kellerhals Jr.
Staff Writer
Washington — The United States and Afghanistan signed an agreement to relieve 100 percent of Afghanistan’s debt to the United States, which is part of a broader poverty-reduction program to improve the lives and livelihoods of the Afghan people, U.S. Ambassador Karl Eikenberry said July 22 at a ceremony in Kabul.
“The agreement by our two governments to relieve Afghanistan of $108 million worth of debt is an important element of the international community’s broader effort to lift the debt burden inherited by the Afghan government,” Eikenberry said with Finance Minister Omar Zakhilwal.
Zakhilwal said this debt relief is a significant step in Afghanistan’s continuing progress. “This cancellation frees us from the burden of debt, allowing us to focus our resources on providing security and development to our people.”
Afghanistan qualified for debt relief after making significant financial and regulatory overhauls, including strengthening its debt management program. Zakhilwal said the money saved will be redirected to government services such as education and health care.
In March the Paris Club, an informal group of the world’s wealthiest nations, agreed to cancel the $1.026 billion debt owed to it by Afghanistan. The Paris Club provides financial services such as debt restructuring, debt relief and debt cancellation to indebted countries.
The World Bank, the International Monetary Fund and creditor nations agreed at the start of the year to provide $1.6 billion in debt relief to Afghanistan. The decision to cancel all these debts is seen as recognition of the progress Afghanistan has made in strengthening its economy, according to the international financial institutions.
The agreement announced July 22 is the culmination of a long process that began in 2007 when Afghanistan first began its debt relief program under the IMF/World Bank Heavily Indebted Poor Countries Initiative (HIPC). Afghanistan’s debt relief under HIPC is an important element of a broader international debt relief program that will ultimately forgive more than $11 billion, or about 96 percent, of its external debt.
The country’s reforms include “implementing the Afghanistan National Development Strategy, reforming the legal framework in the mining sector, and meeting the benchmarks laid out by Afghanistan’s IMF program,” Eikenberry said. |
