Ministers of the Development and Interim Committees met jointly for the first time this morning to discuss the enhancement of the Heavily Indebted Poor Countries (HIPC) Initiative, which will provide faster, broader, and deeper debt relief, with the central goal of reducing poverty in the poorest countries in the world. This meeting symbolizes the cooperation and high political commitment of all countries and institutions in this effort and the new closer relationship between the World Bank and the IMF, which will be crucial in achieving this goal.
We focused on three main areas: first, the reforms required to deliver deeper, broader, and faster debt relief; second, strengthening the focus on poverty reduction in Bank and IMF programs; and third, an overview of the financing arrangements that will allow the enhanced HIPC Initiative to start after these Annual Meetings.
We endorsed the enhancements and reforms to the HIPC Initiative for those countries pursuing sound policies and committed to reform. We support lowering the debt sustainability thresholds; providing faster debt relief; shifting the focus of the initiative toward a commitment to, and positive achievements in, poverty reduction; and increasing the number of countries expected to be eligible for debt relief.
We stressed the need to ensure that debt relief will reduce poverty and endorsed the framework proposed by the Bank and the IMF for strengthening the link between debt relief and poverty reduction. In particular, we welcomed the proposed Poverty Reduction Strategies that countries will prepare in close collaboration with the Bank and the IMF. We stressed the need to put in place macro-economic, structural, and social policies that will generate growth and contribute to poverty reduction. We stressed the crucial role good governance must play in HIPC poverty reduction and implementation of debt relief. We also endorsed the proposals to strengthen the poverty focus of all International Development Association (IDA) and IMF concessional programs.
We agreed that Poverty Reduction Strategies should be country-driven and be developed transparently with the participation of civil society, key donors, and regional development banks. These strategies should be clearly linked with the agreed international development goals, with measurable indicators to monitor progress. They will provide the basis for all IDA and IMF lending to low-income countries and so will ensure the close integration of the institutions’ work in these areas. We also encouraged regional development banks and donors to use the Strategies to guide their support.
We reaffirmed the importance of implementing the enhanced HIPC Initiative in accordance with the principles that have guided the initiative since its inception, including additionality of debt relief, maintaining the financial integrity of multilateral financial institutions, and equitable cost sharing. We agreed that financing of debt relief should not compromise the financing made available through concessional windows, such as IDA.
We expressed appreciation for the many contributions to the HIPC Initiative made thus far and for the efforts of multilateral development institutions to provide funding from their own resources. We also welcomed the agreement by the Paris Club to increase its debt relief under the enhanced framework by providing increased debt reduction in net-present-value terms of up to 90 percent, or more if needed, on commercial loans as well as additional relief on official development assistance claims—up to full cancellation—on a bilateral basis.
Ministers recognized that there will need to be additional bilateral support in order to meet the financing requirements of the enhanced initiative. These financing arrangements will need to be considered at the forthcoming Development and Interim Committee meetings. Based on the expressions of goodwill and support that we have heard, we are confident that the political will and commitment are there to allow the enhanced HIPC Initiative to start after these meetings so that eligible countries can receive enhanced debt relief within the new framework.
We urge the speedy implementation of the enhanced initiative so that as many countries as possible would qualify for assistance under the initiative by end-2000.