Paris Club Writes Off $254 Million of Liberia's Debt
April 18, 2008(Bloomberg) -- By Sandrine Rastello

The Paris Club agreed to write off $254 million of Liberia's debt, a sum the government has committed to spend on projects to reduce poverty.

``On an exceptional basis, considering Liberia's very limited capacity for payment, and provided that this country continued to implement satisfactorily an International Monetary Fund supported program, no payments are expected from Liberia between March 1, 2008, and December 31, 2010,'' the group of creditors said in a faxed statement late yesterday.

Separately, the U.S. will cancel all of its claims on Liberia, totaling about $430 million, State Department spokesman Sean McCormack said.

``The U.S. strongly supports the efforts of the Liberian people and the government of President Johnson Sirlef to overcome years of conflict and instability and to implement reforms that are putting Liberia back on the path of growth and development,'' McCormack said in a statement.

The IMF last year proposed a financing package to clear Liberia's foreign debt, which it called ``unsustainable,'' and urged international donors to support the initiative. Several creditors will also cancel some debt on a bilateral basis, the Paris Club said in the statement.

The Paris Club, an informal association of creditors, including the U.S. and Japan, works to bail out troubled debtors. The group lent Argentina $6.3 billion in 2001, before the country's default on $95 billion in debt.