$500 million has been allocated as debt repayments for next year

The Paris Club, the international forum set up to manage debts owed to nineteen of the world's richest nations, has offered to freeze loan repayments from countries directly affected by the Indian Ocean earthquake and tsunami.

Finance minister Sarath Amunugama said although the country requested a cancellation of debt than a relief, the moratorium is also a “good relief” since Sri Lanka allocated $ 500 million as debt repayments for the next financial year.

Debt cancellation

Speaking with Sandeshaya from Geneva after the UN conference on tsunami relief aids, the minister said the money would instead be spent to rebuild the coastal areas hit by the tidal wave disaster.

Chairman of the Paris Club Jean-Pierre Jouyet said that the countries have decided a suspension of the payments on the request of the countries who wished it.

The debt-freeze is to come into force immediately and without conditions, and could last for up to a year.

Asked whether one year freeze would be sufficient, minister Amunugama expressed hope that it would be longer and Sri Lanka will ultimately be relieved of whole burden of debt.