May 31, 2004

Australian Government Mulls Writing Off Some Of Iraq's Wheat Debt

Australia is considering writing off most of a major debt for wheat sales to Iraq, Trade Minister Mark Vaile said Monday,

He plans to meet later this day with key industry stakeholders, including representatives of grain exporter AWB Ltd. and grain growers, to decide on the debt, which was accrued by Iraq before 1990.

In the early 1990s wheat growers were reimbursed for the amount they were insured for on the national interest account of the government's former Export Finance Insurance Corp.

This reimbursement amounted to A$380 million of about A$480 million of total wheat sales that were not paid for by Iraq, leaving A$100 million plus interest still to be collected, he said.

"We're preparing a position with all stakeholders, prospectively in advance of a possible Paris Club meeting and rescheduling of debt," Vaile told reporters.

The Paris Club is a group of major global economic powers that works within the framework of the International Monetary Fund.

Vaile said the meeting aims to find a way to assist Iraq, a country in difficult circumstances weighed down by debts of US$120 billion, while looking after the interests of grain growers, he said.

Australia is not contemplating a complete write-off of the debt, he said.

Iraq is one of AWB's major export wheat customers.