COMOROS Debt Treatment - August 13, 2010

As agreed in the agreement concluded in November 2009, a further reduction of 50% will be applied to the debt service of the Union of the Comoros from the dated of the Decision Point.

Several creditors intend to grant additionnal debt relief on a bilateral basis to the Union of Comoros beyond the terms set in the Paris Club agreement.

possibility to conduct debt swaps

On a voluntary and bilateral basis, the Government of each Participating Creditor Country or its appropriate institutions may sell or exchange, in the framework of debt for nature, debt for aid, debt for equity swaps or other local currency debt swaps:

(i) the amounts of outstanding loans as regards ODA loans;

(ii) the amounts of other outstanding credits, loans and consolidations, up to 20% of the amounts of outstanding credits as of 30 June 2009 or up to an amount of 30 million SDR, whichever is higher.

good will clause

Given the decision by Paris Club Creditors to contribute to the exceptional assistance in favour of the Government of the Union of the Comoros under the Enhanced HIPC Initiative, the Participating Creditor Countries declare their readiness in principle to hold a meeting at the Completion Point designed to examine the question of the Union of Comores’ outstanding debt stock and to make the necessary effort in favour of the Union of Comores to allow it to reach the objective of its debt sustainability in the context of an equitable burden sharing among creditors, provided that:

- the Government of the Union of Comores maintains satisfactory relations with the Participating Creditor Countries and a sound adjustment track record;

- the Executive Boards of the IMF and the IDA decide that the Union of Comores has reached its Completion Point under the enhanced HIPC initiative.

Phases

• First phase : From June 01, 2010 up to June 30, 2010 implemented at the signature of the agreement
• Second phase : From July 01, 2010 up to June 30, 2011 implemented at March 21, 2011
• Third phase : From July 01, 2011 up to June 30, 2012 not implemented yet

In order to secure comparable treatment of its debt due to all its external public or private creditors, the Government of the Union of the Comoros commits to seek from all its external creditors debt reduction and reorganisation arrangements on terms comparable in net present value to those set forth in the Agreed Minutes dated 13 August 2010 for credits of comparable maturity. Comparability of treatment for debt reduction in net present value is assessed not only on the basis of the reduction in the face value of the debt but also on the terms of repayment of the debts not cancelled.

Consequently, the Government of the Union of the Comoros commits to accord all categories of creditors -and in particular creditor countries not participating in the Agreed Minutes dated 13 August 2010, commercial banks and suppliers- a treatment not more favorable than that accorded to the Participating Creditor Countries.

For the purpose of the comparison between the arrangements concluded by the Government of the Union of the Comoros with its creditors not listed in the Agreed Minutes dated 13 August 2010 on the one hand, and arrangements with the Participating Creditor Countries on the other hand, all relevant elements will be taken into account, including the exposure of the creditors not listed in the Agreed Minutes dated 13 August 2010, the level of cash payments received by those creditors from the Government of the Union of the Comoros as compared to their share in the Union of the Comoros’s external debt, the nature and characteristics of all treatment applied, including debt buy backs, and all characteristics of the reorganised claims and in particular their repayment terms whatever forms they take, and in general the financial relations between the Government of the Union of the Comoros and the creditors not listed in the Agreed Minutes dated 13 August 2010.

Participating creditors

Press release