Restructuring the debt of Sierra Leone

Paris Club creditors agreed on October 16, 2001 with the Government of Sierra Leone to a restructuring of its public external debt, following the approval of an arrangement under the Poverty Reduction and Growth Facility with the International Monetary Fund on September 25, 2001.

This agreement treats roughly US$ 180 million, of which 63% of ODA loans. This amount consists of US$ 130 million of arrears in principal and interest as at September 30, 2001 and US$ 50 million of maturities in principal and interest falling due from October 1, 2001 up to September 30, 2004.

The agreement is concluded under the so-called "Naples terms" : pre-cut off date ODA credits are to be repaid over 40 years, with 16 years of grace, at interest rates at least as favourable as the original concessional rates applying to those loans ; 67% of pre-cut off date commercial credits are cancelled, 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 debt relief will lead to the immediate cancellation by Paris Club creditors of about US$ 72 million of Sierra Leone's external debt. These measures are expected to reduce debt service due to Paris Club creditors between October 1, 2001 and September 30, 2004 from around US$ 180 million down to around US$ 45 million. The remaining payments consist of interest on the rescheduled amounts as well as debt service on post-cut off date debt.