The write-off brings to $439 million the total of Nicaraguan debt forgiven since 1997 by the CABEI, a key multilateral lender to the region. The impoverished Central American country still owes the bank $163 million.

"The debt relief offered by the CABEI is completed and stands at $439 million (for 1997-2003)," said Finance Minister Eduardo Montealegre.

The write-off comes after the International Monetary Fund and World Bank said in January that Nicaragua had cleared the hurdles for $4.5 billion in debt relief from its creditors, slicing off around 80 percent of the country's debt.

The agreement, which binds the IMF and World Bank to provide $489 million in debt relief and expects other creditors to make up the rest of the $4.5 billion, was part of the Heavily Indebted Poor Countries debt relief initiative (HIPC).

Nicaragua, with a population of 5.2 million, is the second-poorest country in Central America after Haiti.

"The contribution we are making today will enable Nicaragua's external debt to be reduced to sustainable levels, so that funds can be used to fight poverty," said CABEI executive president Harry Brautigam.

The CABEI also said it was preparing credits worth $229 million for Nicaraguan producers.