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IRAQ PAYS USD 360 MILLION TO BULGARIA
Bulgaria will receive USD 360 million from Iraq in connection with the settlement of the debt relations between the two countries.
Bulgaria is the first country that reached an agreement for settlement of its claims in the form of one-off cash payment.
At the end of 2004 Iraq signed a memorandum with its Paris Club creditors on reduction of its official debt under the scheme: 80% cancellation of the confirmed debts and rescheduling of the remaining 20% for 23 years with a six-year grace period. The agreement between Iraq and the Paris Club creditors includes a standard provision for comparable treatment of all creditors.
The scheme for reduction and rescheduling of Iraq's debt was not applied by the USA, Malta, Slovakia and Cyprus which have cancelled the entirety of their claims.
On 08 November 2007 the Government approved the bilateral agreement between the Republic of Bulgaria and the Republic of Iraq. It settles the Bulgarian claims against Iraq, amounting to USD 1.860 billion (incl. USD 1.259 billion principal and USD 601 million interest until 2004) ensuing from intergovernmental agreements and protocols concluded before 1989. For the purposes of the agreement the updated assessment of the Bulgarian claims against Iraq by means of additional calculation of default interest was linked to the coefficient for direct payment of the Iraqi debt. In this context, Iraq accepted the new updated amount of its debt totaling USD 3.51 billion while Bulgaria accepted a coefficient of direct payment of the debt of 10.25 cents per dollar.
The conditions agreed in the Bilateral Agreement comply with the agreement between Iraq and the Paris Club creditors. Those envisage that in 2008 Iraq will make a one-off payment of USD 360 million to Bulgaria, which is approximately one-third of the debt principal.
„We are greatly satisfied with the successful end of the almost 2-year negotiations with our Iraqi partners on the inherited debt problem. The results achieved are a good resolution in the framework of the existing international agreements for both parties as well as a basis for continuing our traditional cooperation", said Minister of Finance Plamen Oresharski.