The Paris Club said it also decided to cancel an additional 441 million dollars 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-dollar debt forgiven by the Paris Club represents about half the public external debt that Afghanistan owed in March 2009, or 2.104 billion dollars, 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 programme providing the basis for sustainable economic growth in the context of a difficult global economic environment," the group said in a statement.
Afghan Finance Minister Omar Zakhilwal headed his government's delegation at the meeting on restructuring the debt with the Paris Club. Representatives of the United States, Russia and Germany participated in the talks. 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.
The World Bank and International Monetary Fund said in January that Afghanistan had carried out "a number of important reforms" to reach the completion point of the HIPC Initiative. The reforms included steps to begin implementing a national development strategy, maintain a stable macroeconomic environment and enhance debt management, they said. The Afghan authorities also made progress in public financial management, mining sector reforms, and transparency and accountability in health and education services, the international financial institutions said.