June 9, 1998 No. 152

AXWORTHY ANNOUNCES DEBT RELIEF CONTRIBUTION

Foreign Affairs Minister Lloyd Axworthy today announced a Canadian contribution of $30 million toward debt relief among the world's most heavily indebted poor countries. Mr. Axworthy made his announcement in Ouagadougou, Burkina Faso, where he is attending the Organization of African Unity Summit. This is Mr. Axworthy's first official trip to Africa.

"International debt is one of the most critical obstacles to progress for emerging economies, and Canada has been a leader in helping to relieve developing countries of this burden," said Mr. Axworthy. "Since 1978, Canada has forgiven $3 billion in international debt, much of which was owed by African countries. In fact, since 1987, all Canadian development assistance has been provided in the form of grants."

In 1975, the World Bank established the Interest Subsidy Fund (ISF) through voluntary contributions from Canada and the governments of 14 other OECD (Organization for Economic

Co-operation and Development) and oil-exporting states. It was established to provide interest rate subsidies on loans made by the Bank to low income countries suffering from rising oil prices.

Despite providing nearly US$292 million in subsidies since 1975, the ISF has accumulated US$170 million in unused resources. Canada's share is just over US$22 million, or about C$30 million at current exchange rates.

Canada will contribute its share of this surplus to the World Bank's Heavily Indebted Poor Country (HIPC) Trust Fund. The HIPC Initiative stems from appeals made by the G-7 at the Halifax Summit in 1995 to further ease the debt burdens of the world's poorest and most heavily indebted countries.

As most of these countries are in Africa, Canada has decided to use the bulk of its ISF refund (C$20 million) to help the African Development Bank write down its claims against HIPC-eligible member countries. African countries that have so far benefited from the HIPC initiative include: Uganda, Burkina Faso, Mozambique and Côte d'Ivoire. Mali and Guinea-Bissau are expected to qualify shortly. In March 1998, Canada, through the Canadian International Development Agency, contributed $8 million to Mozambique to help it reduce its debt under the HIPC.

Funding for the projects announced today was provided for in the February 1998 federal budget and is therefore built into the existing fiscal framework.

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For further information, media representatives may contact:

Debora Brown

Office of the Minister of Foreign Affairs

(613) 995-1851

Media Relations Office

Department of Foreign Affairs and International Trade

(613) 995-1874

This document is also available on the Department's Internet site: http://www.dfait-maeci.gc.ca