PARIS (Reuters) - The Paris Club of sovereign creditors said on Friday it had reached a deal with Liberia to cancel $254 million of the west African nation's debt and reschedule some $789 million of debt.

A Paris Club statement said that "on an exceptional basis", no payments were expected from Liberia between March 1 2008 and December 31 2010, provided the country continued to implement an International Monetary Fund programme.

"Several creditors intend on a bilateral basis to grant additional debt relief to Liberia beyond the terms set today in the Paris Club agreement," the statement said.

Liberia has agreed to devote the resources that otherwise would have gone to Paris Club creditors to priority areas aimed at reducing poverty.

Liberia was founded as Africa's first republic in 1847 by black slaves freed from America, and with strong U.S. backing the small country built up an impressive economy based on mining and rubber plantations before a 1989-2003 civil war ruined it.

The stock of debt owed by Liberia to Paris Club creditors as of January 1 2008 was estimated to be more than $1.5 billion in nominal terms, of which more than 97 percent consisted of arrears and late interest.

The members of the Paris Club which participated in the debt were Belgium, Denmark, Finland, France, Germany, Italy, Japan, the Netherlands, Norway, Sweden, Switzerland, Britain and the United States.