Restructuring the debt of Chad

Paris Club creditors agreed on June 13, 2001 with the Government of the Republic of Chad to a restructuring of Chad's public external debt. Given its track-record of reforms as well as the burden of its external indebtedness, Chad reached in May 2001 its decision point under the enhanced HIPC Initiative. A three year arrangement under the Poverty Reduction and Growth Facility was approved by the International Monetary Fund on January 7, 2000.

This agreement consolidates roughly US$ 15 million of commercial credits. It includes US$ 3 million of arrears in principal and interest as at April 30, 2001 and US$ 12 million of maturities in principal and interest falling due from May 1, 2001 through March 31, 2003.

The agreement is concluded under the so-called "Cologne terms" designed by Paris Club creditors for the implementation of the enhanced HIPC Initiative : pre-cut off date commercial credits falling due after the decision point are treated so as to reach a 90% cancellation rate taking into account previous cancellations undertaken by Paris Club creditors ; the remaining amounts are rescheduled over 23 years, with 6 years of grace, at market rates of interest (see attached table).

This interim relief will lead to the immediate cancellation by Paris Club creditors of about US$ 10 million of Chad's external debt, consistent with the implementation of the enhanced HIPC Initiative. These measures are expected to reduce debt service due to Paris Club creditors between May 1st, 2001 and March 31, 2003 from US$ 17 million to US$ 2.4 million. The remaining payments consist of interest on the rescheduled amounts and of maturities on post-cut off date debt. Chad is committed to devote the resources freed by the present exceptional treatment of the debt on priority areas identified in the country's poverty reduction strategy.

The creditor countries expressed their readiness to reduce Chad's stock of debt, as soon as Chad reaches the completion point under the enhanced HIPC Initiative.