Agreement on German External Debts

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London Agreement on German External Debts also known as the London Agreement, was a debt relief treaty between the Federal Republic of Germany on one part and on Belgium, Canada, Ceylon, Denmark, the French Republic, Greece, Iran, Ireland, Italy, Liechtenstein, Luxembourg, Norway, Pakistan, Spain, Sweden, Switzerland, the Union of South Africa, the United Kingdom of Great Britain and Northern Ireland, the United States of America, and Yugoslavia on the other, signed on 8 August or 27 February 1953 (mixed sources). The German government under Chancellor Konrad Adenauer agreed to assume the external debts incurred before the war by the Nazi Germany. The debts were reducted by 62.6% (Germany’s prewar debt amounted to 22.6 bn reichmarks including interest, its postwar debt was estimated at 16.2 bn; these sums were reduced to 7.5 bn and 7 bn respectively).

The agreement arranges the Federal Republic of Germany’s repayment obligations to 33 countries; however Eastern Bloc nations are excluded from consideration as are foreign claims for reparations against Germany due to the Second World War.

The agreement allowed Germany to enter the World Bank and IMF institutions. The agreement significantly contributed to the reconstruction of German economy and reemergence of Germany as a major economical power of the second half of the 20th century.