France proposes increase of 20% ceiling for debt swapping for some countries

French Minister of Economy and Finance Dominique Strauss-Kahn proposed the cancellation of the 20% ceiling set for swapping debts owed to the Paris Club by some countries, like Morocco and Egypt.

In a letter he sent on Wednesday to his colleagues from the most-developed countries (G-7), the French minister proposed that the ceiling be increased to 30 or 50 %. He also suggested the creation of a debt amortization fund to be fed by rich countries according to their gross national product.

The French minister recalled that this proposal was notified orally to the G-7 finance ministers in their meeting last February 20 in Bonn, and was also debated by preparatory meetings to next June's summit of Cologne (Germany).

Paris is defending a "generous and global" approach to indebtedness on the basis of the existing "Heavily-Indebted Poor Countries" initiative, approved by the Lyon G-7 summit in 1995. The initiative guarantees to crediting countries that their creditors participate in development efforts.

France also launched an appeal to France-based non-governmental organizations to contribute to the usage of the funds obtained from debt cancellation in infrastructure, health and education projects.