Newsroom: Article

Emerging Market De(bt)velopments

Russia agreed to write-off $12.9bn of Iraq’s debt and to restructure another $900m. The deal is part of one struck in 2004 between Iraq and the Paris Club group of creditors, under which Russia and other countries promised to cancel 80% of Iraq’s outstanding debt.
Russia will initially give Iraq a 65% discount on the overall $12.9bn debt and four-fifths of the outstanding $4.5bn will be written off after a series of multilateral talks with Paris Club members. Further reductions on the remaining 20% would depend on Iraq fulfilling a series of conditions set by the International Monetary Fund (IMF).
The IMF conditions envisage Iraq restoring oil output to 2.2 million barrels per day, reducing inflation to 12% and raising gross domestic product by 7% annually. After the write-off, the remaining $900m will be repaid over 17 years, enabling Russia to collect an extra $1.1bn in interest.
The deal seems to have been made possible as a result of improving prospects for Russian investment in Iraq. In particular, Iraq has re-opened negotiations with Lukoil on a deal paving the way for the Russian oil major to develop the West Qurna oil field, which has the potential to produce 600,000 barrels per day.

We advise holders of Guinean, Gambian and/or Iraq debts to contact us for advice on any questions relating to (potential) defaults or the possibility of trading out of risk positions.

A. Thiescheffer on thiescheffer@omnibridgeway.com
R. van Hulst on vanhulst@omnibridgeway.com
H. Rijkens on rijkens@omnibridgeway.com 

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