This pamphlet describes the IMF-World Bank initiative begun in 1996 to address in a comprehensive manner the overall debt burden of eligible heavily indebted poor countries (HIPCs) pursuing programs of adjustment and reform supported by the two organizations. The aim of the Initiative is to reduce these countries debt to sustainable levels so that they can meet current and future debt service obligations without unduly compromising growth. 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, 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.

Revised December 1997

ISSN 0538-8759

ISBN 1-55775-661-9

Composition: Alicia Etchebarne-Bourdin


  • Preface

  • Traditional Debt-Relief Mechanisms for HIPCs

    • Paris Club Creditors

    • Commercial and Non-Paris Club Bilateral Creditors

    • Multilateral Creditors

    • Positive Net Resource Transfers and New Financing on Concessional Terms

  • The HIPC Initiative

    • The Main Objectives of the HIPC Initiative

    • Some Key Features of the HIPC Initiative

    • Key Steps in Implementing the HIPC Initiative

  • Progress Made in the HIPC Initiative

  • Conclusion

  • Annex. The HIPC Initiative

  • Glossary of Terms

  • Box

    • Paris Club Naples Terms

  • Tables

    • 1. Status of Paris Club Rescheduling Countries

    • 2. HIPCs: Indicators of External Debt Burden

    • 3. HIPCs: Characteristics of Existing External Debt

    • 4. Evolution of Paris Club Rescheduling Terms

    • 5. Commercial Bank Debt- and Debt-Service-Reduction Operations, 1987-March 1997

    • 6. HIPCs: Net Disbursements from Multilateral Institutions

    • 7. HIPCs: Net Concessional Flows, Debt Service Due and Paid

  • Figures

    • 1. Developing Countries: Public External Debt by Creditor, 1980-95

    • 2. The HIPC Initiative: Summary

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 onset of the debt crisis in the early 1980s, many heavily indebted poor countries (HIPCs) continue to have difficulty in paying their external debt-service obligations, largely because of exogenous factors, imprudent debt-management policies, and the lack of sustained adjustment or implementation of structural reforms. The international community over the past decade has implemented a wide range of traditional mechanisms destined to provide needed external finance and alleviate the debt burden of these countries. While these traditional mechanisms are sufficient to reduce the external debts of many HIPCs to sustainable levels provided these countries implement sound economic policies, they are likely to be insufficient for a number of countries. To deal with these cases, the World Bank and the IMF have jointly proposed and put in place the HIPC Initiative; the goal is to reduce the debt burdens of all eligible HIPCs to sustainable levels.

This pamphlet describes the HIPC Initiative and suggests that it should enable HIPCs to exit from the debt-rescheduling process. It argues that implementation of the Initiative should eliminate debt as an impediment to economic development and growth and enable HIPC governments to focus on the difficult policies and reforms required to remove the remaining impediments to achieving sustainable development. It describes the implementation of the Initiative through the end of September 1997.

The authors would like to thank Jack Boorman, Doris Ross, and Christina Daseking, of the IMF’s Policy Development and Review Department, and Fred Kilby and Axel van Trotsenburg of the World Bank, for helpful comments. Barbara Dabrowska provided valuable statistical help, and Sulochana Kamaldinni typed numerous drafts as well as the final version of the pamphlet with her customary patience and efficiency. Thanks are also due to Esha Ray of the External Relations Department for her editorial assistance.

The 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.