Treatment of the debt of Cameroon

Paris Club creditors agreed on January 24, 2001 with the Government of the Republic of Cameroon to a restructuring of its public external debt. Given its strong track-record of reforms as well as the burden of its external indebtedness, Cameroon reached in October 2000 its decision point under the enhanced HIPC Initiative. This Paris Club agreement also follows the International Monetary Fund's approval of a Poverty Reduction and Growth Facility on December 21, 2000.

This agreement consolidates roughly US$ 1.3 billion. This amount is broken down between US$ 0.2 billion in arrears as of December 31, 2000 and US$ 1.1 billion of maturities in principal and interest falling due from January, 1, 2001 up to December 31, 2003 (of which about 17% is Official Development Assistance loans).

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 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 ; pre-cut off date commercial credits falling due after 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.

This interim relief will lead to the immediate cancellation by Paris Club creditors of about US$ 0.9 billion of Cameroon'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 January 1, 2001 and December 31, 2003 from US$ 1.25 billion down to around US$ 0.25 billion. The remaining payments consist of interests on the rescheduled amounts and of maturities on post-cut off date debt. Cameroon is committed to use 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 Cameroon's stock of debt, as soon as Cameroon reaches the completion point under the enhanced HIPC Initiative