Norwegian government cancels Benin’s debt

The government decided today to cancel the whole of Benin’s debt to Norway, which amounts to about NOK 233 million. This means that Norway has now forgiven debts from developing countries to a total of over NOK 1.2 billion.

The agreement to cancel Benin’s debt is based on a multilateral framework agreement concluded in the Paris Club, which is a forum for creditor countries, in April. The debt treatment for Benin in the Paris Club is part of the international initiative for reducing the debts of the poorest and most debt-stricken countries (the Heavily Indebted Poor Countries, or HIPC, initiative).

Under the Paris Club agreement Norway is obliged to give Benin a debt reduction of 37 per cent, about NOK 86 million. However, the government has chosen to cancel the entire debt, giving Benin an extra NOK 147 million.

The debt originated in Norwegian deliveries and export credit guarantees to the oil sector in Benin.

In line with the Norwegian Debt Relief Strategy, the debt was cancelled without taking any funding from the development budget. The cancellation therefore does not affect development assistance to any poor country.

Benin is the second country to have its entire debt to Norway cancelled; Tanzania was the first.