The Paris Club of 19 creditor countries said March 17 it was canceling all of Afghanistan’s debt owed to its members, more than $ 1billion, after Kabul committed itself to fighting poverty. The informal group of industrialized nations said in a statement it was erasing $585 million of debt on a bilateral and voluntary basis after the Afghan government vowed to allocate the freed resources to combat poverty. The Paris Club said it also decided to cancel an additional $441 million representing the club’s share of an IMF and World Bank initiative that provides low interest loans to the world’s poorest countries. The $1.026-billion debt forgiven by the Paris Club represents about half the public external debt that Afghanistan owed in March 2009, or $2.104 billion, the group said. “Paris Club creditors welcomed the Islamic Republic of Afghanistan’s determination to implement a comprehensive poverty reduction strategy and an ambitious economic program providing the basis for sustainable economic growth in the context of a difficult global economic environment,” the group said in a statement, as cited by AFP. The group said it agreed to cancel Afghanistan’s debt after the war-torn country reached the “completion point” under the IMF and World Bank’s Heavily Indebted Poor Countries (HIPC) Initiative, which requires participants to take steps to reduce poverty in order to qualify for near-zero interest rate loans.

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