Wed, Jun 27, 2007 - Page 3 News List

MOFA confirms Nicaragua asked for debt pardon

By Jewel Huang  /  STAFF REPORTER , WITH AGENCIES

A Ministry of Foreign Affairs (MOFA) official yesterday confirmed that Nicaragua had asked Taiwan for debt cancelation, adding that the government was carefully considering the request in light of the global trend for countries to pardon debts by highly indebted nations.

Simon Ko (柯森耀), director-general of MOFA's Department of Central and South American Affairs, made the remarks in response to reporters' questions on a report by the Chinese-language China Times and the United Daily News yesterday saying Nicaraguan Foreign Minister Samuel Santos had asked Taiwan to cancel its foreign debt of about US$16.5 million as a condition to maintaining bilateral diplomatic relations.

Offering poor countries debt relief or debt cancelation is a global trend and a majority of these highly indebted countries make such request to their creditors, Ko said at a routine press conference yesterday, adding that Nicaragua' s request had nothing to do with the incident earlier this month in which Costa Rica switched recognition to Beijing.

Nicaragua is one of the nations included in the Heavily Indebted Poor Countries (HIPC) Initiative launched by IMF and the World Bank in 1996.

The HIPC Initiative aims to provide debt reduction to heavily indebted countries and ensure that no poor country faces a debt burden it cannot manage.

"Since Nicaragua is also one of the nations in the HIPC Initiative, it could ask for debt reduction like other poor countries do," Ko said.

Ko, however, declined to confirm the amount of the debt that Nicaragua owed Taiwan.

"Although [offering debt cancelation to poor country] is a global trend, Taiwan has to assess whether it has the ability to respond to such a request. We need to thoroughly discuss and study the request," he said.

In addition to the HIPC Initiative, the MOFA will refer to the measures that the Paris Club takes to help poor countries.

Paris Club is an informal group run by 19 of the world's richest countries that provides financial services such as debt restructuring, debt relief and debt cancelation to indebted countries and their creditors.

"Debt reduction is a huge project and it involves many legal aspects. It is not a stand-alone issue that the MOFA can decide by itself," Ko said.

Referring to the demands of Nicaragua, Chinese Nationalist Party (KMT) legislators Joanna Lei (雷倩) and Kuo Su-chun (郭素春) on Monday said that the nation's allies were making unreasonable demands for aid.

The pair also blasted the "costly efforts" by the government to preserve diplomatic ties. They were referring to a report by ETToday.com, which said the government has budgeted US$848 million this year to preserve its diplomatic ties with 24 countries.

Out of the diplomatic budget, US$309 million is budgeted for "emergency use" or "international cooperation," the online paper said.

ETToday.com estimated that the nation's real diplomatic budget was even higher, saying there's also a US$151 million to US$181 million "secret budget" for diplomatic activities that could not be made public

"Taiwan is like a credit card supplier. Our allies' relationship with Taiwan is based on ... the use [of] our credit cards and [they] later do not have to pay for their purchases," Lei was quoted as saying.

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