DR Congo wins debt relief despite Canadian concerns

Thu Jul 1, 2010 5:20pm EDT
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By Lesley Wroughton and Katrina Manson

WASHINGTON/KINSHASA (Reuters) - The World Bank on Thursday approved debt relief for the Democratic Republic of Congo without the backing from Canada and Switzerland, which both cited governance concerns in the country.

The estimated $8 billion debt relief deal is the largest debt write-off by the World Bank and the International Monetary Fund under global programs launched in 1996 to ease the debt burdens of the world's poorest countries.

Both bodies said the deal would generate total debt-servicing cost savings of $12.3 billion for the mineral-rich, Central African country, which despite a 2003 peace deal, is still plagued by a violent conflict with rebels in the east and sporadic insecurity elsewhere.

"The DRC will no longer face a heavy debt-service burden in relation to its revenue and foreign exchange resources," they said in a joint statement.

Canada blocked the debt relief deal at the World Bank board on Tuesday by requesting a delay due to its concerns related to a dispute between Vancouver-based First Quantum Minerals and the Congolese government over mining rights, officials said.

Canadian officials said they were concerned with governance and rule of law in the Congo, which Ottawa raised at a leaders' summit of the Group of Eight in Toronto last weekend.

But Canada's last-ditch efforts to slow the debt relief process did not sway enough support among other World Bank member countries, mainly because the Kinshasa government had met all of the key economic benchmarks required under the international debt relief program.

The IMF board approved the deal on Wednesday and said Congo was strongly committed to tackling corruption and improving transparency in its mining and oil sectors. Approval by both institutions was needed.   Continued...