PARIS – Rich creditor nations offered Wednesday to let tsunami-hit countries halt repayments on billions of dollars of debt, possibly for as long as a year, the chairman of the Paris Club (search) said.
Jean-Pierre Jouyet said the group of 19 wealthy nations — including the United States — would allow any country directly affected by the Dec. 26 Indian Ocean earthquake and tsunami (search) to halt debt repayments if they wanted to.
Only Sri Lanka, Indonesia and the Seychelles have expressed an interest so far, he said. French Finance Minister Herve Gaymard said earlier that Thailand does not want to take advantage of the offer because of fears it could affect its credit rating.
The moratorium could last up to a year, depending on the results of assessments to be carried out by the International Monetary Fund (search), Jouyet said.
The five countries affected most by the tsunami — Indonesia, Sri Lanka, Thailand, India and the Maldives — pay $23.1 billion each year in public debt to foreign governments, the IMF and the World Bank. When debt service to other creditors, such as commercial banks, is added, they pay $45 billion annually.
Leading industrialized nations in the Paris Club regard the moratorium as "completely indispensable" in helping Asia recover, Gaymard said. France has pushed the idea along with Britain and Germany.
But the moratorium raised questions of fairness and possible corruption. Governments and international financial organizations have long wrestled — with limited success — with how to relieve debt burdens in developing countries, mainly African nations even poorer than the tsunami-hit countries.
Some economists question whether relief is needed at all, arguing that governments in the affected countries can still pay their debts because the tsunami did no insurmountable damage to local economies nor cause regional stock markets to collapse.