WASHINGTON, Dec 17 (AFP) - The United States on Friday formally wrote off all of its 4.1 billion dollars in Iraqi debt and urged other nations to follow suit as a critical move for the country's reconstruction.
Secretary of State Colin Powell, Treasury Secretary John Snow and Iraqi Finance Minister Adil Abd al-Mahdi signed the accord formalizing the US commitment made to the Paris Club of Iraqi creditors last month.
The group of 19 creditors agreed to cancel 80 percent of the approximately 40 billion dollars (30 billion euros) in debt owed them by the ousted regime of Saddam Hussein. Washington went further and agreed to wipe out all of its share.
Powell and Snow called on countries outside the Paris Club to provide a similar lifeline to the administration in Baghdad, which took office facing a total of 127 billion dollars in debt, according to Mahdi.
"Lifting the crushing burden of the old regime's debt is one of the most important contributions we can make to Iraq's new beginning," Powell told the signing ceremony in the State Department' ornate Benjamin Franklin room.
"This a tremendous victory, this is a victory for the Iraqi people," he said. "We urge other nations who are not Paris club members to reach comparable agreements on Iraqi debt relief."
Snow called the debt relief measure "another critically important milestone on the path to prosperity in Iraq" but added that "it's clear more is needed." He said the United States stood ready to help other countries reach debt-cancellation accords.
Iraq's Paris Club of creditors, which includes the United States, Japan, Russia and EU nations, agreed on November 21 to gradually wipe out 80 percent of the money it was owed.
It said the accord, which would reduce Iraq's debt to the club to about 7.8 billion dollars in three years, was intended to ensure Iraq's "long-term debt sustainability."
Iraqi Prime Minister Iyad Allawi welcomed the agreement but expressed hope that the remaining 20 percent would be forgiven and Arab creditors would also do their part to help his country.
12/17/2004 18:28 GMT - AFP