Italy, Australia announce debt relief

The Italian government has cancelled a US $375 million debt owed by Ethiopia, the pro-government Walta Information Centre reported on Tuesday. It quoted the Italian ambassador to Ethiopia, Guido La Tella, as saying the move was in line with the decision reached under the heavily Indebted Poor Countries (HIPC) initiative as outlined by the IMF and the World Bank. He also said Italy was implementing rural development projects in Oromiya State worth $150 million under a bilateral cooperation programme. The projects mainly focused on road construction and maintenance, capacity building, as well as on health, education, micro-credit and potable water services, Walta quoted La Tella as saying. Meanwhile, the African Development Bank had agreed to lend the Ethiopian government $135.76 million, the agency reported. It quoted the Ethiopian foreign ministry as saying the funds would help implement the Genale-Dawa Integrated Resources Development Master Plan Study, the Butajira-Hosaina-Sodo road project and the Structural Adjustment Programme. In a related development, the Australian government has announced debt relief to Ethiopia worth $A 11.5 million (about US $6 million), according to a press release issued on 15 November by the Australian Ministry of Foreign Affairs and Trade. It said the move had been made because Ethiopia had qualified under the HIPC initiative. The IMF and World Bank announced on 12 November that Ethiopia had qualified for $1.9 billion in debt relief under the HIPC initiative. Ethiopia is the 24th country to qualify for debt relief under the initiative's enhanced framework. The savings from debt servicing as result of the country's HIPC qualification would amount to nearly US $100 million a year for the next 20 years, providing much-needed succour to a country in whose average per capita earnings ranks second-lowest in the world at US $100 per annum.