Long wait for Iraq debt money

24 Nov, 2004 10:00 PM
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WA wheatgrowers could have to wait another seven years to get any money owed from wheat sales to Iraq, after the Federal Government agreed to write off 80pc of the debt owed to Australia.

Under an agreement negotiated at the Paris Club last weekend, the Federal Government will forgive $1.08 billion (US$850.7 million) of principal and interest as part of an international effort to slash Iraq's debt by $53b (US$42b).

The country owed more than $191.71b (US$150b) to about 40 countries, including reparation payments from its 1990 invasion of Kuwait.

It will not have to start repaying the key amounts not forgiven until 2011.

But WAFarmers president Trevor De Landgrafft said it would be an absolute disgrace if farmers had to wait until 2011 to receive any payments from Iraq.

"The government can wait until 2011, they're not short of money - but plenty of farmers are having a tough year this year," Mr De Landgrafft said.

He said they have had to battle drought in parts of WA and the eastern states, rising oil prices and the Australian dollar and low commodity prices.

"We've got a lot of issues in agriculture but we are not asking for a handout," he said.

"We are just asking for what's due to us and it's a good time for the government to show a bit of faith for those in the industry who have done the right thing by the nation.

"The government knows that money (the remaining 20pc) is coming so they should pay it out in lieu and let the farmers have their money now."

In August the Grains Council of Australia said the former Iraq government owed AWB Ltd about $613m (US$480m).

A total of 80pc of this amount was paid in 1992 by the Export Finance and Insurance Corporation (EFIC) and growers received this amount.

"The uninsurable portion, about $125.25m (US$98m), was assigned by AWB to EFIC in April this year because it was felt by both AWB and the government that EFIC had a better chance of recovering the defaulted payments from Iraq, once their economy begins to recover," GCA president Keith Perrett said.

A statement from the Department of Foreign Affairs and Trade said the main terms of the agreement immediately forgive Iraq 30pc of total debt stock.

"A further 30pc reduction of debt stock will be provided upon signing of a full International Monetary Fund (IMF) arrangement for Iraq, expected to start in 2005," the statement said.

"An additional tranche of debt reduction representing 20pc of debt stocks will be granted at the end of the three-year IMF arrangement."

The statement said the government's decision to forgive a substantial part of Iraq's debt reflected the overwhelming necessity of contributing to Iraq's recovery and stabilisation.

"It will free up resources to assist Iraq recover more quickly," it said.

"Relieved of much of its debt, Iraq has the potential to become a stable partner for Australia in the Middle East, providing new opportunities for Australian exporters and investors.

"This includes in the market for wheat, which has long been Australia's largest export to Iraq.

"The government will continue its efforts to facilitate wheat exports to Iraq."

Part of these efforts include possible plans for the construction of a $20m grains processing facility in Iraq.

Trade Minister Mark Vaile said a feasibility study into the facility would be carried out during a visit to Baghdad last December.

Farm Weekly asked Mr Vaile's office for a progress report on the study but did not get a response before going to press.

Mr De Landgrafft said he was not holding his breath about a facility proceeding in Iraq any time soon.

"It was a bit of chat to get us interested at the time," he said. "We've never had much confidence in that."

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