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Paris Club creditors agreed on March 6, 2001 with the Government of Georgia to a restructuring of Georgia's external debt.

Restructuring the debt of Georgia

March 06, 2001

Paris Club creditors agreed on March 6, 2001 with the Government of Georgia to a restructuring of Georgia's external debt. This agreement follows the International Monetary Fund's approval of Georgia's arrangement under the Poverty Reduction and Growth Facility on January 12, 2001.

This agreement consolidates roughly US$ 58 million due on loans contracted by Georgia before November 1, 1999 ("cut-off-date", see attached technical notes). This amount consists of principal falling due from January 1st, 2001 through December 31, 2002 (of which US$ 1 million are ODA loans).

The rescheduling is structured on the following terms : ODA credits are to be repaid over 20 years, with 10 years of grace, at interest rates at least as favourable as the concessional rates applying to those loans ; commercial credits are to be repaid over 20 years, with 3 years of grace with progressive repayment, at market rates of interest. However, loans resulting from previous bilateral consolidations negotiated by the Georgian Government will be rescheduled at an interest rate not higher than the interest rate of these bilateral consolidations. The attached tables describe the repayment profile of the restructured amounts.

This agreement is expected to reduce debt service due to Paris Club creditors during 2001 and 2002 from US$ 88 million to US$ 33 million, which consists mainly of payments of interest due on existing loans plus payments of interest on the rescheduled amounts.

On a voluntary and bilateral basis, each creditor may also undertake debt for nature, debt for aid, debt for equity swaps or other local currency debt swaps.

This debt restructuring will make an important positive contribution to Georgia's economic outlook. After a comparable effort from other creditors, this rescheduling will satisfy Georgia's financing requirements for 2001 and 2002.

Creditors agreed in principle to consider further restructuring of Georgia's external debt falling due during the remainder of the program period in case of financing need.

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