The Paris Club Monday canceled the remaining 20 percent, or $7.8 billion, of Iraq's debt stemming from the Saddam Hussein era.
The economic group is an informal consortium of leading world economies working with the International Monetary Fund to coordinate debt restructuring and relief for developing nations.
U.N. Secretary-General Ban Ki-moon hailed the measure as a "major achievement" for Iraq and a recognition of the government in Baghdad to embrace necessary reforms.
"This is a major achievement and acknowledgment of the Iraqi government's determination to implement necessary reforms despite overwhelming challenges," the U.N. statement said.
The secretary-general also called on creditor nations outside the Paris club to take similar action in an effort to integrate Iraq into the international economy.
Notable deaths of 2014 [PHOTOS]