Ethiopia's $11.5m debt forgiven

15th November, 2001.


Australian will forgive an $11.5 million debt to Ethiopia, Treasurer Peter Costello and Foreign Affairs Minister Alexander Downer have said.

The decision followed Ethiopia's qualification for the World Bank and International Monetary Fund's Heavily Indebted Poor Countries (HIPC) Initiative on Monday, the ministers said in a joint statement.

The debt relates to an Australian loan to help Ethiopia buy sugar cane processing equipment.

"Bilateral debt relief to Ethiopia is expected to cost approximately $1.2 million this fiscal year and $2.4 million each year thereafter," the ministers said.

The debt would be forgiven in full once Ethiopia completed the HIPC Initiative, they said.

In April last year, Australia pledged 100 per cent bilateral debt forgiveness to countries that qualified for debt relief under the enhanced HIPC Initiative.

Nicaragua's debt to Australia was forgiven last December.

The cost was additional to the aid budget, the ministers said.