Japan finalized an agreement Thursday to forgive $6.1 billion of Iraqi debt, or about 80 percent of the total owed by Baghdad, a government official said.
The two countries signed the formal accord on debt reduction, which was in line with a framework agreed by the world's main creditor nations, the Paris Club, one year ago. At that time, the Paris Club nations all agreed to reduce by 80 percent the $38.9 billion Iraq owed to its member states.
The United States last year forgave 100 percent of Iraq's $4.1 billion debt. Baghdad owes another $80 billion to various Arab governments, mainly Saudi Arabia and Kuwait.
A Japanese Foreign Ministry spokesman said Iraq will repay the remainder of its $7.6 billion debt to Japan over 23 years, including a 6-year grace period. The official spoke on condition of anonymity, citing ministry regulations.
Iraqi Foreign Minister Hoshyar Zebari arrived in Japan Wednesday. He met his Japanese counterpart, Taro Aso, the official said.
Japan is mulling whether to extend its military mission in the southern Iraqi city of Samawah, where about 600 Japanese troops are stationed to purify water and rebuild schools among other tasks.
Japan's mission expires on Dec. 14. Prime Minister Junichiro Koizumi, who is pushing for a more active role for Japanese troops in international security, has suggested Japan's work in Iraq is not finished. Zebari was scheduled to meet Koizumi on Friday.