FRANCE: The Paris Club of creditor nations reached an agreement yesterday to freeze debt repayments of countries hit by the Asian tsunami, the club's president said.
"The suspension takes effect immediately," Paris Club president Mr Jean-Pierre Jouyet told reporters after talks in Paris.
He said it would apply to those countries that wanted to accept it but did not immediately give any details.
The French Finance Minister, Mr Herve Gaymard, had earlier told the Paris Club that the Group of Seven rich industrial nations believed a debt moratorium was vital, and he expected Indonesia, Sri Lanka and the Seychelles to accept the deal.
The 19 members of the Paris Club were meeting at the French Foreign Ministry to discuss the plight of Asian countries hit by the catastrophe. Their external debts total about $272 billion, with Indonesia alone owing it some $48 billion.
Indonesian Foreign Minister, Mr Hassan Wirajuda, whose country was the hardest hit by the tsunami, had welcomed the prospect of a debt freeze deal but also said Jakarta needed more donations to cope with the disaster.
Sri Lanka hopes to secure at least a two-year moratorium on debt repayment, a senior official of the country's finance ministry said. It has total multilateral and bilateral debts of $8.82 billion, and debt servicing is expected to cost about $476 million in 2005.
Some other countries, such as Thailand, have said they do not believe a debt moratorium is the best form of assistance.
The Australian Prime Minister, Mr John Howard, said last week that he would consider any debt proposal but feared any move to forgive debt or freeze repayments would not help those most in need.
Australia is one of the Paris Club's 19 permanent members, but the group's decisions on debt relief are taken by consensus rather than unanimity.
The G7 countries - France, the United States, Japan, Germany, Britain, Italy and Canada - are all in the Paris Club.
"It appears to members of the G7 ... that a moratorium is absolutely indispensable in order to allow the affected countries to overcome their immense difficulties," Mr Gaymard said.
"That is the clear and simple message that I brought to the heads of the delegations meeting here."
However, Indonesia wants to ensure any Paris Club decision does not adversely affect its talks with the London Club of commercial creditors or affect its credit rating, which could raise the cost of future borrowings.