NO.098

JOINT PRESS RELEASE

TREASURER

MINISTER FOR TRADE

AUSTRALIA FORGIVES ETHIOPIA’S DEBT

The Treasurer, the Hon Peter Costello MP, the Minister for Foreign Affairs,

the Hon Alexander Downer MP and the Minister for Trade, the Hon Mark Vaile

MP, are pleased to announce that the Australian Government has forgiven

Ethiopia’s bilateral debt to Australia of $7.9 million.

This announcement follows a recent determination by the International

Monetary Fund (IMF) and the World Bank that Ethiopia has undertaken all

steps necessary under the enhanced Heavily Indebted Poor Countries (HIPC)

Initiative to be afforded debt forgiveness.

On 21 April 2000, the Australian Government pledged 100 per cent bilateral

debt forgiveness to countries that qualified for debt relief under HIPC.

Ethiopia is the second country to receive such bilateral debt forgiveness

from Australia, the cost of which is in addition to the aid budget.

Australia supports the enhanced HIPC Initiative as one way of effectively

addressing the unsustainable debt burdens of the world’s poorest,

most heavily indebted countries. Twenty seven countries have now benefited

from the initiative, qualifying for over US$55 billion in debt relief, which

amounts to nearly two thirds of their total stock of external debt in net

present value terms.

The HIPC framework requires countries to prepare comprehensive, locally

owned poverty reduction strategies and ensures that the proceeds of debt

relief are directed towards basic health, education and poverty reduction

programmes. Ethiopia is committed to devoting the resources freed by the

forgiveness of its debts to the social sectors, such as health and education,

and investment in infrastructure.

Australia’s decision to forgive this debt formally follows Ethiopia’s

qualification for HIPC assistance in November 2001. Since that time Ethiopia

has not been required to service its debt to Australia pending it reaching

the final stage of the HIPC process.

In addition to forgiving bilateral debts owed to Australia by countries

that qualify for HIPC assistance, the Australian Government has committed

$77 million to date to assist the World Bank and the IMF to provide debt

relief through the HIPC Initiative.

MELBOURNE

15 November 2004

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