Canada to Forgive Most Iraq Debt

Canada has agreed to forgive most of Iraq’s debt and believes other countries should do the same as quickly as possible, Prime Minister Paul Martin said Friday.

“Along with the other members of the G-7 [Group of Seven leading industrialized nations] we have agreed to forgive the vast majority of Iraq’s debt,” Martin told reporters in Davos, Switzerland. He was attending the World Economic Forum.

He said it would be done through the Paris Club, which consists of 19 nations owed about $40 billion by Iraq, all of it incurred before Iraq’s 1990 invasion of Kuwait.

Canada is owed $564 million, excluding past-due interest.

In a statement released in Ottawa, Martin said: “Debt reduction is critical if we want the Iraqi people to have the opportunity to build a free, stable and prosperous country. Canada therefore supports a reduction of the vast majority of Iraq’s debt. It is vital that this issue be dealt with quickly and effectively.”

Iraq’s overall debt is estimated by some analysts at $120 billion. Without substantial debt relief, the country is likely to have great difficulty rebuilding.

The United Nations and the World Bank have estimated that rebuilding costs in Iraq will total about $55 billion from 2004 through 2007. That figure assumes Iraq will be restored to the condition that prevailed before the 1991 Persian Gulf War.