(July 22): The Governments of the United States and Afghanistan today signed a debt relief agreement that cancels 100 percent of Afghanistan’s existing debt with the United States. The total amount of debt being cancelled is $108 million. The signing ceremony was held at the Ministry of Finance, where Ambassador Karl W. Eikenberry signed on behalf of the Government of the United States and Minister of Finance Omar Zakhilwal signed on behalf of the Government of Afghanistan.
Speaking at the signing ceremony, Ambassador Eikenberry noted that “debt relief is crucial to Afghanistan’s broader poverty reduction program, as it will allow the Afghan Government to spend more of its future resources in such sectors as health and education which improve the lives of the Afghan people.” Those efforts, in turn, will strengthen Afghanistan’s domestic economy, making them “an integral element of the Afghan Government’s mission to provide a safe, stable, and prosperous environment for Afghans throughout the country.”
Minister Zakhiwal agreed that today’s agreement is a significant step in Afghanistan’s continuing progress. “On behalf of our people, I would like to thank the United States for its generous assistance to Afghanistan. This cancellation frees us from the burden of debt, allowing us to focus our resources on providing security and development to our people.”
Today’s agreement represents the culmination of a process that began in 2007, when Afghanistan first began its debt relief program under the IMF/World Bank Heavily Indebted Poor Countries Initiative (HPIC). Afghanistan completed its HIPC Initiative program in January, marking an important step on the country’s road to economic sustainability and reflecting the international community’s acknowledgment of Afghanistan’s progress in economic reform. Afghanistan’s debt relief under HIPC is an important element of a broader international debt relief program that will ultimately forgive over $11 billion (96%) of Afghanistan’s external debt.