Swiss consider debt freeze for Asian nations

A debt moratorium may help tsunami victims get on with their lives again Keystone

Switzerland has welcomed the idea of freezing debts owed by the countries affected by the tidal-wave disaster in Asia.

This content was published on January 4, 2005

One nation that could benefit is Indonesia, which owes Bern more than SFr440 million ($380.7 million).

Discussions are set to take place with other creditor nations, including Britain, Germany and Italy, under the aegis of the Paris Club on January 12.

Representing Switzerland at the talks will be the State Secretariat for Economic Affairs (Seco) and the Swiss Export Credit Agency.

“We support the plan to discuss a debt moratorium for all countries affected by the tidal disaster,” said Seco spokeswoman Antje Baertschi.

Switzerland is one of the 19 permanent members of the Paris Club, which comes together when debtor countries have difficulties paying their dues to creditor nations.

According Peter Silberschmidt, director of the Swiss Export Credit Agency, the discussions would centre on whether the moratorium would apply to the debts in full or in part.

Silberschmidt added that Indonesia – with more than 94,000 dead - should benefit from debt relief, as it had always paid its dues to Switzerland on time.

Wide support

A repayment freeze could be worth as much as $5.7 billion for all the affected countries, according to Britain’s finance minister, Gordon Brown.

With the disaster killing nearly 140,000 across Asia, France and Germany led European appeals for relief on debt owed by the worst affected countries.

Canada has already frozen the debts owed it by the affected Asian countries.

According to a source close to the Paris Club, a moratorium would depend largely on the United States and Japan, the two main creditors of the countries concerned.

US Secretary of State Colin Powell said that the proposal of a debt moratorium was “interesting” and worth considering.

swissinfo with agencies

Key facts

The Paris Club is an international forum of creditor and debtor nations.
It is an ad-hoc group of representatives of donor and debtor countries.
If a debtor country is not in a position to meet its payment obligations, donor countries meet at the Club to discuss the issue.

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