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Countries cancel $1 billion in Afghanistan debt

STORY HIGHLIGHTS
  • Afghanistan is participating in a program for indebted poor countries
  • Afghanistan to use the money on programs in line with U.N. program for poverty reduction
  • Afghanistan's external public debt estimated at $2.1 billion in March 2009
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Paris, France (CNN) -- Countries are canceling more than $1 billion in debt that Afghanistan owes them, the Paris Club of creditor nations announced Wednesday.

The debt relief comes partly in response to Afghanistan's participating in a program for Heavily Indebted Poor Countries, the Paris Club said in a statement. Some $441 million is being canceled as part of the HIPC Initiative, while creditors are voluntarily writing off another $585 million, the group said.

Afghanistan agreed in exchange to use the money it would have spent on paying its debts on programs in line with the U.N. Millennium Development Goals and poverty reduction.

The creditors said that they "welcomed the Islamic Republic of Afghanistan's determination to implement a comprehensive poverty reduction strategy and an ambitious economic program providing the basis for sustainable economic growth in the context of a difficult global economic environment."

Afghanistan's total external public debt was estimated at $2.1 billion in March 2009, the Paris Club said. About half of that was owed to Paris Club members.

The Paris Club is an informal group of creditor governments from major industrialized countries that meets monthly in Paris with debtor nations on restructuring their debts.