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Office of the Press Secretary

For Immediate Release March 16, 1999
                              March 16, 1999

President Clinton today called on the international community to pursue a comprehensive approach to debt relief for the heavily indebted poorest countries -- the HIPCs -- which, if fully implemented by creditors and the HIPCs, could result in forgiving an additional $70 billion in debt.

Today's proposal extends the U.S. commitment to providing more relief, more quickly to a broader range of heavily indebted poor country that have strong reform programs.

The following are key elements of President Clinton's initiative, and the US will work with its colleagues in the G7 to implement these proposals:

     Front Loaded Relief:   Focus on early cash flow relief by the
     international financial institutions, in conjunction with ongoing
     forgiveness of cash flows by the Paris Club, to accelerate relief
     from debt payment burdens without undermining the incentive for
     sustained economic performance.

     Deeper Debt Reduction:  Complete forgiveness of bilateral
     concessional loans, rather than rescheduling as is done at present;
     forgiveness of bilateral non-concessional debt up to 90%; and in
     exceptional cases on a broader base of debt.

     Avoid Future Debt Problems:  Seek international commitment to
     provide at least 90% of new aid to HIPC countries on a grant basis.

     Exceptional Relief in Exceptional Cases:  Deeper debt reduction in
     exceptional circumstances to those countries where it can make a
     real difference.

     Innovative Approaches:  To channel resources from HIPC receiving
     debt reduction from debt service into education or environmental
     protection, using innovative financial instruments like
     debt-for-nature swaps; and take new approaches to promote
     reconstruction in countries emerging from protracted conflicts;

     New Financing:  Gold sales by the IMF, additional contributions to
     the World Bank's HIPC Trust Fund and other creative approaches to
     help meet the costs of this initiative.

If all HIPC-eligible countries qualify, these proposals would reduce an additional $3 billion in U.S. bilateral debt than under the current HIPC initiative and would leverage almost $70 billion in additional debt relief from other creditors.