- International Monetary Fund
- Published Date:
- January 1999
Debt Relief for Low-Income Countries
The Enhanced HIPC Initiative
David Andrews, Anthony R. Boote, Syed S. Rizavi, and Sukhwinder Singh
INTERNATIONAL MONETARY FUND
Revised November 1999
Production: IMF Graphics Section
Cover design: Luisa Menjivar-Macdonald
Figures: In-Ok Yoon
Typesetting: Alicia Etchebarne-Bourdin
DEBT RELIEF FOR LOW-INCOME COUNTRIES: THE ENHANCED HIPC INITIATIVE
The following symbols have been used throughout this pamphlet:
… to indicate that data are not available;
— to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;
– between years or months (e.g., 1996–97 or January–June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years (e.g., 1996/97) to indicate a crop or fiscal (financial) year.
“Billion” means a thousand million.
Minor discrepancies between constituent figures and totals are due to rounding.
The term “country,” as used in this pamphlet, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.
Since the debt crisis of the 1980s the international financial community has been providing help to debtor countries in reducing their external debt burdens in order to foster growth, reduce poverty, and attain external viability. This assistance has taken the form of the provision of concessional financing from international financial institutions, debt relief from official creditors mainly in the context of Paris Club reschedulings, and, in some cases, through bilateral action by the creditors. These measures have resulted in considerable success in alleviating the external debt burdens of many middle-income countries. Many poor countries, especially those in sub-Saharan Africa, however, continue to suffer from unacceptable levels of poverty and heavy external debt burdens owing to a combination of factors, including imprudent external debt-management policies, lack of perseverance in structural adjustment and economic reform, deterioration in their terms of trade, and poor governance.
To address the problems of these countries, the World Bank and the IMF in September 1996 jointly launched the Initiative for the Heavily Indebted Poor Countries (HIPCs) with the aim of reducing the external debt burdens of all the eligible HIPCs to a “sustainable” level in a reasonably short period of time. This pamphlet describes the rationale for and the main features of the Initiative as it was originally conceived in 1996 and its implementation through the fall of 1999. It then goes on to describe the review process launched in early 1999, which culminated in the approval of an enhanced HIPC Initiative in late 1999 that is aimed at providing deeper and more rapid debt relief to a larger number of countries. The enhanced HIPC Initiative also seeks to ensure that debt relief is integrated into a comprehensive poverty reduction strategy that is developed with broad-based participation and tailored to the country’s circumstances.
The authors wish to acknowledge with thanks the helpful comments of Russell Kincaid and Doris Ross of the Policy Development and Review Department. Thanks are also due to Jeff Hayden of the External Relations Department for editorial assistance, and to Sulochana Kamaldinni and Seetha Milton for secretarial support.
The views and opinions expressed in the pamphlet are those of the authors and do not necessarily reflect the views of the IMF or of its Executive Directors.