The EIB is signing an agreement with the Republics of Liberia and Togo to reduce their levels of debt to the Bank within the framework of the IMF Heavily Indebted Poor Countries (HIPC) initiative.

The debt reduction reconfirms the EIB's commitment to sustainable economic development and poverty reduction in Africa. The agreement will help the West African republics to reduce their external debt on public finances and facilitate investment in projects which improve the quality of life for their inhabitants.

The agreements were signed in Dakar by Plutarchos Sakellaris, the EIB Vice President responsible for operations in Africa, in the presence of the Liberian Minister of Finance Augustine Kpehe Ngafuan, and the Togolese Minister of Finance Adji Otèth Ayassor.

In his address, EIB Vice President Sakellaris underlined the Bank's dedication to strengthening and deepening relations with Liberia and Togo, "In anticipation of this most welcome event, we at the EIB have already advanced in our discussions with public and private partners in both Liberia and Togo to undertake financing operations in support of projects which are of strategic importance for economic and social development."

The agreement will have three important benefits for the concerned West African republics. Firstly, the EIB has reduced the countries' overall debt owed to the Bank, abandoning a portion of the arrears which resulted from loans from the Bank's own resources borrowed on the international capital markets. This will not only provide relief for these countries but also clearly illustrates the EIB's ongoing participation in the HIPC initiative to which it has committed almost EUR 100 million globally to date.

Secondly, the Bank has agreed that outstanding debt repayments will be suspended until 2012 to further encourage economic and financial development in the highly indebted countries before they have to fulfil their debt obligations.

Finally, this move will allow the EIB to move forward in its relations with Togo and Liberia, recommencing lending operations after almost 20 years of inactivity as a result of the outstanding arrears. The EIB will focus its activity in these countries on providing loans and technical assistance for viable projects promoting growth of the private and financial sectors, as well as key infrastructure which allows for significant improvements in living conditions.

The EIB's Board of Directors has already given their approval for a EUR 3.5 million loan in support of microfinance in Liberia, and the Bank hopes to finalise this agreement in the near future.

Background Notes:

EIB Activity in Africa, Caribbean and Pacific

The European Investment Bank (EIB) is instrumental in implementing the EU's development and economic cooperation policy in countries outside the Union. The EIB has been a development partner in many African, Caribbean and Pacific (ACP) countries since 1963 through a series of lending mandates from the European Council. The current mandate is based on the Cotonou Agreement of June 2000.

EIB loans in the ACP regions support the alleviation of poverty and the development of sustainable economic growth. The Bank lends from two sources - EIB own resources and the Investment Facility, a revolving fund financed by the EU Member States through the European Development Fund.

EIB lending activity in Liberia and Togo

The EIB made its first loan to Liberia in 1978, since which time it has committed over EUR 15 million in loans to support the private sector, energy, industry and services in the country.

In Togo, between 1976 and 1989 the EIB lent almost EUR 44 million to promote developments in industry, telecommunications, transport and services.