On December 22, the IMF and the World Bank announced that their Executive Boards had endorsed the adoption of the Poverty-Reduction Strategy Paper (PRSP) as the central mechanism for developing and coordinating concessional lending to low-income member countries, including the commitment of resources under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. The text of Press Release No. 99/65, which follows, is also available on the IMF’s website (www.imf.org).
The PRSP will be formulated by national authorities in broad consultation with stakeholders. It will describe and diagnose poverty conditions in a country and present a medium-term action plan to reduce poverty and generate more rapid economic growth. The PRSP, which will include performance indicators as a central element, is intended to provide a framework for assistance from bilateral donors and from multilateral financial institutions.
A joint IMF-World Bank paper entitled “Poverty-Reduction Strategy Papers: Operational Issues,” has been posted on the IMF and the World Bank websites for public comment and to underline the importance of participation by civil society in the development of effective poverty-reduction programs. The joint paper can be accessed at: www.imf.org/external/np/pdr/prsp/poverty1.htmand www.worldbank.org/poverty/strategies/index.htm.
The Executive Boards of the IMF and the World Bank were mandated to implement a broad poverty-reduction effort by the governors of the IMF and the World Bank at their Annual Meetings in September 1999. This mandate included steps to underpin the enhanced HIPC Initiative and to strengthen the poverty-reduction focus of debt relief and various forms of concessional assistance.
IMF and World Bank Directors have reviewed the status of implementation under the enhanced HIPC framework and endorsed an updated schedule that would bring three countries—Bolivia, Mauritania, and Uganda—to their final decision points when full debt relief is committed in January 2000. Depending on policy implementation and resolution of outstanding issues, five to eight additional countries, including Mozambique, could reach their decision points by early spring. The total debt-relief packages under the initiative for these countries could reach from $7 billion to $10 billion in net present value terms (between $13 billion and $18 billion in nominal terms).
Financing for multilateral institutions is critical to assure rapid implementation of the enhanced HIPC framework. One important source of this financing is the HIPC Trust Fund, which is administered by the World Bank’s International Development Association. By early September 1999, the HIPC Trust Fund had received approximately $330 million in contributions from bilateral donors. Subsequently, donors announced or reconfirmed pledges of nearly $1.8 billion to the HIPC Trust Fund. The recent $70 million contribution by the Netherlands is the first of these new pledges to be paid in.
Earlier in December, the IMF Executive Board took the decisions necessary to enable the IMF to begin to make its contribution to the enhanced HIPC Initiative, and the first off-market gold sales were completed on December 14 and December 17 (see below and Press Release No. 99/57, IMF Survey, December 13, 1999, page 393).