IMF Executive Directors agreed on June 22 that the IMF’s work program should be modified in light of the Group of Eight (G-8) proposal, announced on June 11, that the World Bank, IMF, and African Development Bank cancel their claims on 18 countries that have reached the completion point under the HIPC (Heavily Indebted Poor Countries) Initiative and other HIPC countries (currently 17) as they reach the completion point. The decision to revisit the IMF’s work program came out of an initial Board discussion of the G-8 proposal, which focused partly on issues that will need to be addressed in analyzing the proposal.
The Executive Board asked staff to carefully assess the proposal, and its legal, financial, and policy implications for the IMF, as well as possible modifications. This assessment will be considered in the context of other proposals related to the IMF’s involvement with low-income countries that are already on the Board’s near-term discussion agenda. In the meantime, the IMF will continue to operate under existing policies and procedures until decisions to alter these policies are taken by the required majorities. That is, the IMF will make new commitments and disbursements under the Poverty Reduction and Growth Facility (PRGF) and the HIPC Initiative, and member countries will continue servicing, in full and on a timely basis, their financial obligations to the IMF and the PRGF trust.
Bilateral contributions from the G-8 countries (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States) and other donors would cover the costs of debt relief to the World Bank and the African Development Bank; current IMF resources would cover the costs of debt relief for obligations to the IMF. For countries whose existing and projected debt-relief obligations cannot be met through existing IMF resources (for example, Liberia, Somalia, and Sudan), donors commit—under the G-8 proposal—to provide the extra resources necessary: “We will invite voluntary contributions, including from the oil-producing states, to a new trust fund to support poor countries facing commodity price and other exogenous shocks.”
Which countries would benefit from the new proposal? The 18 that have reached the completion point under the HIPC Initiative are Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda, and Zambia. The other 17 are Burundi, Cameroon, the Central African Republic, Chad, the Comoros, Côte d’Ivoire, the Democratic Republic of Congo, The Gambia, Guinea, Guinea-Bissau, the Lao P.D.R., Malawi, Myanmar, the Republic of Congo, São Tomé and Príncipe, Sierra Leone, and Togo.
The full text of Public Information Notice No. 05/79, “IMF Executive Board Discusses G-8 Finance Ministers’ Proposal for Further Debt Relief for HIPCs,” is available on the IMF’s website (http://www.imf.org).