Iraq to Repay $408 million Egyptian Debt

Iraq has agreed to pay $408 million in cash to Egypt to settle old debts owed by Baghdad from more than two decades ago, a government spokesman said.

Reuters reports that the debts date back to a period when United Nations sanctions following the 1990 Iraqi invasion of Kuwait blocked the payment of salaries that were due to hundreds of thousands of Egyptian labourers who worked in Iraq in the 1980s.

"The Iraqi cabinet decided that the finance ministry should pay the $408 million in original debts to Egypt," Ali al-Dabbagh said in a statement. "This payment is a proof of Iraqi solid economic relations with the world countries," he said.

Prime Minister Nuri al-Maliki's government wants to foster better ties with Arab neighbours and foreign creditors, and the Iraqi finances have improved post-Saddam.

In 2003, the country's external debt was $130-$140 billion but that went down to about $88 billion last year. The Paris Club of 19 rich creditor nations agreed in 2004 to write off 80 percent of Iraq's roughly $40 billion debt.

Progress on debt forgiveness talks with non-Paris Club creditors remains uneven though the United Arab Emirates cancelled Iraq's debt in 2008. Estimates of Iraq's non-Paris Club debt vary but Kuwait, Turkey and Saudi Arabia are among the notable hold outs.

(Source: Reuters, Aswat al-Iraq)

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