November 17, 2006
HP-172

Treasury Department Applauds Agreement to Provide Debt Relief to
Bolivia, Guyana, Haiti, Honduras, and Nicaragua

Washington, D.C. - Treasury welcomes the agreement today by the governors of the Inter-American Development Bank (IDB) to provide 100 percent debt reduction to the poorest countries of Latin America and the Caribbean.

"Debt relief for the poorest countries in the Western Hemisphere is critical to reducing poverty and stimulating economic growth," said Assistant Secretary for International Affairs Clay Lowery. "One year ago, at the Summit of the Americas, President Bush called on the Treasury Department to work with our colleagues at the bank to provide debt relief for the region's poorest countries in order to lift the burden of poverty and promote opportunity in the region. The United States has been a leading voice for such an initiative and today's agreement on a way forward is a critical step in that effort."

The agreement reached today at an IDB meeting in Washington, D.C. puts forth a plan for providing critical debt relief to Bolivia, Guyana, Haiti, Honduras and Nicaragua, while at the same time sustaining the financial viability of the IDB's concessional windows through 2015.

Following President Bush's call to address the debt sustainability of the poorest countries in the region the Treasury Department worked closely with the IDB this year to develop a proposal that would both provide debt reduction and reform the bank's Fund for Special Operations (FSO) and Intermediate Financing Facility (IFF).

Additionally, IDB governors agreed that in consideration of its special needs, Haiti would receive an appropriate mix of loans and/or grants to help achieve debt sustainability while providing critical resources for poverty-reduction programs.

Treasury worked closely with many borrowing and non-borrowing members to craft an approach that resulted in today's consensus. IDB Governors will meet again in January to discuss implementation, working toward a goal of reaching final agreement on all aspects of the initiative by the 2007 IDB Annual Meeting in Guatemala.

"In particular, the Government of Brazil deserves praise for its leadership in moving this process toward a consensus," said Lowery.

This agreement follows on U.S. supported debt relief initiatives in the IMF and World Bank that together provided the poorest countries in this region with $14 billion in debt relief.