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Debt treatment -
November 16, 2004

Supporting agreements with the international institutions

Total external debt of the country

$4 843 million as of December 31, 2003

$1 572 million of which being due to Paris Club as of October 01, 2004

Amounts treated

$1 057 million of which $752 million being canceled, of which $305 million being rescheduled

Accorded treatment

Reduction of the stock of debt

Completion point reached on October 21, 2004

Categories of debt treated

Treatment of arrears as of September 30, 2004

Treatment of the stock as of October 01, 2004

Repayment profile

Treatment under HIPC Initiative Exit terms

Specific provisions

Possibility to conduct debt swaps

On a voluntary and bilateral basis, the Government of each creditor country or its appropriate institutions may sell or exchange, in the framework of debt for nature, debt for aid, debt for equity swaps or other local currency debt swaps : (i) all ODA loans ; (ii) the amounts of other outstanding credits, loans and consolidations, up to 20% of the amounts of outstanding credits as of December 31, 1996 or up to an amount of SDR 30 million, whichever is higher. Participating creditor countries and the Government of the Republic of Madagascar will inform semi-annually the Secretariat of the Paris Club, who will inform other creditors, of the debt swaps agreements they have implemented. All elements necessary to evaluate the operation, its impact on the Republic of Madagascar's economy and on the evolution of creditor's exposure will be transmitted to the Secretariat including : its nature and purpose ; the parties to the debt swap ; the amount, type and value of the debt treated ; the price of sale to investors and the expense of the Republic of Madagascar.

Comparability of treatment provision

The Republic of Madagascar was declared eligible to the Enhanced HIPC initiative by the IDA and the IMF in 1999 and was declared to have reached its Completion Point on October 21, 2004. In this context, the Republic of Madagascar commits to seek promptly from all its external creditors which are not participating in the present Agreed Minute, their appropriate contribution in terms of debt relief to the enhanced HIPC initiative, on top of traditional debt relief mechanisms and consistent with the proportional burden sharing based on their relative exposure in net present value of total external debt at Decision Point after the full use of traditional debt relief mechanisms.

The appropriate nature of the debt relief provided will be assessed not only on the basis of the reduction in the net present value of the debt as computed under Appropriate Market Rate, but also on the terms of repayment of the debts not cancelled. For this purpose, all relevant elements will be taken into account, including the level of cash payments received by those creditors as compared to their share in the Republic of Madagascar's external debt, the nature and characteristics of all treatment applied, including debt buy backs, and all characteristics of the reorganized claims and in particular their repayment terms whatever forms they take and in general the financial relations between the Republic of Madagascar and creditor countries not listed in the present Agreed Minute.

Consequently, the Republic of Madagascar commits not to accord any category of creditors -and in particular creditor countries not participating in the present Agreed Minute, commercial banks, suppliers and bondholders- a treatment more favourable than that accorded to the Participating Creditor Countries.

Cut-off date

July 01, 1983

Organisation of the session

The meeting was chaired by Mr. Ramon Fernandez, Vice-President of the Paris Club.

The head of the debtor country's delegation was Mr. Jacques Sylla, Prime Minister.

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