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World - Americas

Hillary Clinton tours Mitch devastation region

November 16, 1998
Web posted at: 2:25 p.m. EST (1925 GMT)

TEGUCIGALPA, Honduras (CNN) -- U.S. first lady Hillary Rodham Clinton was expected to arrive in Honduras on Monday as part of a scheduled trip to Central America, which is now dominated by the urgent aid needs of countries in Central America devastated by Hurricane Mitch.

Her visit came on the heels of a series of international leaders who toured the region amid promises of emergency and reconstruction aid -- particularly for Nicaragua and Honduras, the two worst-affected nations.

France -- whose president, Jacques Chirac, was also touring the crisis region -- again renewed its drive for debt relief for countries devastated by Mitch.

Chirac, speaking in Guatemala City on Sunday, said France "had decided to write off all of the aid and development debt owed by Guatemala, Nicaragua, Honduras and El Salvador."

The total write-off covered 739 million francs ($132 million).

Chirac also called on all countries in the Paris Club of creditor nations to follow France's example in offering debt relief.

But while other countries can offer their own bilateral help, the Paris Club traditionally awaits International Monetary Fund approval of economic reforms before offering international debt relief.

Of the four countries involved, only Nicaragua and Honduras have the track record on economic reform to obtain the IMF's stamp of approval needed for Paris Club debt relief.

The amounts written off by France are also relatively small compared to the total amount owed by Honduras, Nicaragua, Guatemala and El Salvador.

According to World Bank estimates, Honduras owes $4.1 billion, Nicaragua $5.9 billion, Guatemala $3.7 billion and El Salvador $2.7 billion, including debt owed to both Paris Club and non-Paris Club creditors.

The Paris Club in April agreed to write off 67 percent of Nicaragua's debt.

The French Finance Ministry said last week it wanted to provide Nicaragua with a debt write-off of up to 80 percent -- available under the Heavily Indebted Poor Countries (HIPC) initiative for countries with a track record of economic reform and a previous debt deal with the Paris Club.

The Paris Club is due to hold its next regular meeting in early December.

Reuters contributed to this report.

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