The agreements also allowed, for the first time, debt-equity swaps by creditor governments, up to a maximum of 10 per cent of outstanding debts.

But creditor governments, many facing severe budgetary restraints, are unlikely to react with great enthusiasm.

To date, creditor governments have cancelled 11% of Africa's concessional bilateral debts.

The initiative assumed that creditor governments would write off about 80 percent of their loans to such countries.

Meanwhile, creditor governments would give tax incentives to write off such loans.

Mr. Brady today declined to discuss a controversial element - guarantees by creditor governments of interest payments if a debtor stops paying.

For creditor governments and banks, only the debt incurred before the mid-1980's will be eligible for this relief in most cases.

Of this, 58 percent is owed to creditor governments, 22 percent to international institutions and 14 percent to foreign banks.

The government no longer needs new loans, but will use the agreement to start talks with the Paris Club of creditor governments on $42 billion in old debts.

Brazil got a big financial boost from the "Paris Club" of creditor governments late last month.