Bulgaria has decided to reduce Iraq's debt by 340 million US dollars, one-fifth of Iraq's debt owed to the eastern European country, the daily Monitor reported Monday.

Bulgarian Finance Minister Plamen Oresharski said that Iraq owed Bulgaria a total of 1.7 billion US dollars and the remaining 80 percent of the debt can be paid in a period extended by 20 to 25 years.

Oresharski added that Bulgaria's move was following suit of the Paris Club creditor countries, which wrote off 80 percent of Iraq's arrears owed to the group of creditors.

He also mentioned Bush's call for debt relief from non-Paris Club nations as a motive behind Bulgaria's decision.

Iraq accumulated most of its debt owed to Bulgaria during the Gulf War as a result of buying machinery equipment, weapons and other commodities. The two countries have discussed the debt issue but failed to reach any concrete settlement.

Source: Xinhua