Back Matter

Back Matter

International Monetary Fund
Published Date:
March 2004
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    Net official development finance (ODF) fell from an average of

    82 billion in the second half of the 1990s to an average of
    67 billion in 2000–01 (Tables A1.1 and A1.2 and Figure A1.1).28 The main factor behind the decline in ODF was a significant fall in other official financing, which includes nonconcessional finance provided mainly to middle-income countries and economies in transition. This form of financing fell in 2000 mainly as a result of both reduced lending and substantial repayments of loans associated with the Asian, Brazilian, and Russian crises of 1997–98.29 Despite a rebound in new lending in 2001, large repayments continued to keep this element of the net ODF at a depressed level. In contrast, net ODF to HIPCs remained at about
    15 billion each year in the last few years, in part reflecting the resumption of IMF- and World Bank-supported economic programs in a number of HIPCs in 2000–01. Although net ODF fell substantially during this period, its share of total net resource flows to developing countries (inclusive of private flows) remained near the 1990s average of 34 percent, due to the sharp fall in private flows to developing countries.

    Table A1.1.Total Net Official Financing Flows to Developing Countries from DAC Countries by Type of Donors and Creditors
    (Billions of U.S. dollars)
    Net official development finance (ODF)284.587.673.575.489.085.965.568.3
    Net official development assistance (ODA)259.659.155.847.950.352.149.552.357.0
    Other official flows (ODF)324.928.517.727.638.733.816.017.7
    (Percent of total OOF)
    (Billions of U.S. dollars)
    Memorandum items
    Gross ODF2128.2134.5119.4121.6165.0158.41237143.2
    Gross ODA71.072.269.461.564.568965.665.3
    Net ODF (at constant 2000 prices and exchange rates)89.6101.682.979.191.489.865.5658
    Total net resource flows5225.9264.2350.7321.6230.7312.0212.9190.7
    Net ODF as a share of total net flows (percent)37.433.121.023.538.627.530.835.8
    ODA share of respective ODF (percent)
    Source: OECD.
    Table A1.2.Developing Countries/Areas and Territories, as of January 2003
    Part I: Developing Countries/Areas and Territories

    (Recipients of official development assistance)
    Part II: Countries/Areas and Territories in Transition (Recipients of official aid)
    Least developed countriesOther low-income countries (Per capita GNI <$745 in 2001)Lower-middle-income countries (Per capita GNI $746–2,975 in 2001)Upper-middle-income countries (Per capita GNI $2,976–9,205 in 2001)High-income countries (Per capita GNI >$9,206 in 2001)Central and Eastern European countries and newly independent states of the former Soviet UnionMore advanced developing countries/areas and territories
    Afghanistan, I.S. of*Armenia*AlbaniaPalestinian AdministeredBotswanaBahrain*BelarusAruba
    Angola*AzerbaijanAlgeriaAreasBrazil*BulgariaBahamas, The
    BangladeshCameroonBelizeParaguayChile*Czech Rep.Bermuda
    BeninCongo, Rep. ofBoliviaPeruCook Islands*EstoniaBrunei
    BhutanCôte d’IvoireBosnia and HerzegovinaPhilippinesCosta Rica*HungaryCayman Islands
    Burkina Faso*GeorgiaChinaSouth AfricaCroatia*LatviaTaiwan Province of China
    BurundiGhanaColombiaSri LankaDominica*LithuaniaCyprus
    CambodiaIndiaCubaSt. Vincent and theGabon*PolandFalkland Islands
    Cape VerdeIndonesiaDominican Rep.GrenadinesGrenada*RomaniaFrench Polynesia
    Central African Rep.KenyaEcuadorSurinameLebanon*RussiaGibraltar
    ChadKorea, Dem. People’sEgyptSwazilandMalaysia*Slovak Rep.Hong Kong SAR
    ComorosRep. ofEl SalvadorSyrian Arab Rep.Mauritius*UkraineIsrael
    Congo, Dem. Rep. of*Kyrgyz Rep.FijiThailandMayotteKorea, Rep. of
    Equatorial GuineaMongoliaGuyanaTongaPanamaLibya
    EritreaNicaraguaHondurasTunisiaSt. HelenaMacao
    EthiopiaNigeriaIran, I.R. ofTurkeySt. LuciaMalta
    Gambia, ThePakistanIraq*TurkmenistanVenezuela, Rep.Netherlands Antilles
    GhanaPapua New GuineaJamaicaWallis and FutunaBolivariana deNew Caledonia
    Guinea-Bissau*TajikistanJordanYugoslavia, Fed. Rep. ofQatar
    Kiribati*UzbekistanMacedonia, FRYSlovenia
    Lao P.D.R.VietnamMarshall IslandsThreshold forUnited Arab Emirates
    LesothoZimbabweMicronesia, Fed. States ofWorld BankVirgin Islands (U.K.)
    LiberiaMoroccoloan eligibility
    MadagascarNamibia($5,185 in 2001)
    MaliAntigua and Barbuda
    NigerMontserratDA FLOWS
    SamoaPalau Islands
    Sao Tome and PrincipeSaudi Arabia
    Sierra LeoneSt. Kitts and Nevis
    Solomon IslandsTrinidad and Tobago
    SomaliaTurks and Caicos
    Yemen, Rep. of
    Source: OECD Development Assistance Committee, list of aid recipients.

    Figure A1.1.Direction of Net Official Flows, 20011

    Source: OECD database.

    1Official development assistance (ODA) represents flows of official financing with the main objective of promoting economic development and with a grant element of at least 25 percent (based on a 10 percent discount rate). Other official flows (OOF) represent official development finance (ODF) that does not meet the ODA criteria; includes officially supported export credits.

    2Multilateral disbursements (including from the IMF) differ from DAC countries’ contribution to multilateral institutions.

    3Includes countries in the Middle East.

    4Includes economies in transition and more advanced developing countries, as defined by the DAC.

    Net official development assistance (ODA), the major component of net ODF, fell slightly from

    52 billion in 1999 to about
    50 billion in 2000, before rising to an estimated
    57 billion in 2002.30 The decline in 2000 and 2001 resulted from lower gross disbursements by donor countries both directly to the recipient countries and through contributions to multilateral institutions. After adjusting for changes in prices and exchange rates, real net ODA actually increased by 6 percent in 2001 (Table A1.3). For 2001, declines in net ODA disbursements from several countries were observed, including Japan, where a substantial decline in net ODA reflected repayments on large short-term credits that had been extended during the Asian crisis. A rise in net disbursements by other DAC donors, however, partially offset these declines (Table A1.4). Preliminary data indicate that, in 2002, large increases in ODA were observed for Greece (34.2 percent), Italy (31.5 percent), Canada (31.6 percent), Norway (16 percent), and the United States (11.6 percent). A variety of factors led to these increases, including higher contributions to multilateral agencies (Greece and Italy), policy intentions to increase the share of ODA (Canada and Norway), and new aid initiatives, some of which were related to the September 11 attacks (United States).

    Table A1.3.Net ODA Disbursements to Developing Countries
    (Billions of U.S. dollars)
    Total net ODA265.065.362.254.958.362.459.859.5
    Of which
    DAC countries59.659.155.847.950.352.149.552.357.0
    Bilateral ODA46.646.145.238.441.143.341.241.4
    Of which
    DAC countries41.340.639.132.435.237.936.035.0
    Contributions to multilateral institutions318.519.217.016.517.219.118.518.0
    Of which
    DAC countries18.318.416.715.415.114.213.415.6
    Total net ODA from DAC countries
    (at 2000 prices and exchange rates)56350.949.545.749.049.949.552.5
    Bilateral ODA39.035.034.730.934.336.236.036.4
    Contributions to multilateral institutions17.315.914.814.714.713.613.416.2
    Distribution4(Percent of total)
    Net ODA by income group
    Least developed countries27.728.824.926.824.923.424.725.9
    Low-income countries26.423.723.621.824.925.823.825.6
    Lower-middle-income countries22122.023.524.623.725.023.323.5
    Upper-middle-income countries4.
    High-income countries0.
    Other countries511.314.19.911.914.115.215.912.7
    Net ODA by region
    Sub-Saharan Africa32.934.431.234.331.727.529.630.8
    North Africa and Middle East15.
    Western Hemisphere9.111.511.011.411.211.411.212.2
    (Billions of U.S. dollars)
    Memorandum items
    Total gross ODA71.072.269.461.564.568.965.665.3
    Of which
    Gross bilateral ODA52.553.252.845.247.349.947.147.2
    Total net ODA to developing countries760659.856.648.931.252.950.551.6
    Development Assistance Committee countries41.340.639.132.435.237.936.035.0
    Multilateral institutions of DAC countries18.318.416.715.415.114.213.415.6
    Other flows81.
    Total net ODA to developing countries as percent of recipient GNI (in percent)
    Total net ODA to HIPCs18.818.916.814.614.714.514.415.5
    Total flows within developing countries (net ODA)
    Source: OECD.
    Table A1.4.Net ODA Disbursements by Major DAC Countries
    Change 2001/02
    At Current PricesAt Constant 2001 PricesAt current pricesAt constant 2001 prices4Share of Donor’s GNI 2002
    (Billions of U.S. dollars)
    United Kingdom2.–3.50.30
    United States11.411.311.710.19.97.4946.
    G-7 donors440.943.848.644.646.644.741.335.138.642.640.238.241.740.
    Other DAC donors512.012.914.111.913.014.314.512.711.89.39.314.115.314.08.2–0.70.46
    Total DAC53.056.760.861.659.659.155.847.950.352.149.552.357.
    (In percent of GNI)0.330.330.330300.300.
    Source: OECD.

    The share of ODA in donors’ gross national income fell between 2000 and 2001 to an average of 0.22 percent, one of the lowest levels since 1990. Only Denmark, Luxembourg, the Netherlands, Norway, and Sweden provided ODA above the United Nations recommended level of 0.7 percent of national income in 2000. For the G-7 countries, this ratio was below 0.2 percent on average, although these countries provided the bulk of the net ODA disbursements in U.S. dollar terms (Figures A1.2 and A1.3). In 2000, Japan was the largest provider of ODA (

    13.5 billion), followed by the United States (
    10 billion), Germany, the United Kingdom, and France (each providing between
    4–5 billion). With the decline of Japanese ODA in 2001 and 2002, the United States became the largest provider of ODA in these two years.

    Figure A1.2.Net ODA Disbursements by Total DAC and G-7 Countries

    (Billions of U.S. dollars and percent)

    Source: OECD.

    1Not strictly comparable to earlier data due to the reclassification of some former ODA recipients to official aid recipients (Part II of the DAC’s list of aid recipients). See Table A1.2.

    2Data for 2002 are preliminary and may change.

    Figure A1.3.Net ODA Disbursements by G-7 and Other DAC Countries1

    (Percent of GNI)

    Sources: OECD; and IMF staff estimates.

    1Ratio of aggregate net ODA disbursements to aggregate GNI, for each group.

    2Data for 2002 are preliminary and may change.

    Distribution of ODA Flows

    The composition and distribution of ODA has remained largely unchanged compared with past years, with a few exceptions (Table A1.5). Around two-thirds of ODA continues to take the form of direct bilateral financing to recipients, with the remaining one-third consisting of contributions to multilateral institutions. Almost all bilateral ODA is offered to recipients in the form of grants, with assistance for the purposes of social, administrative, and economic infrastructure making up around half of total allocations in 2000–01.

    Table A1.5.Composition of Bilateral Net ODA Disbursements to Developing Countries
    (Billions of U.S. dollars)
    Total net ODA65.065.362.254.958.362.459.8595
    Bilateral ODA46.646.145.238.441.143.341.241.4
    Contributions to multilateral institutions118.519.217.016.517219.118.518.0
    Composition of bilateral net ODA
    By type of assistance
    Of which
    Project grants6.05.95.9595.34.95.0
    Program grants2.
    Technical cooperation13.014.514.413.213.313.313.013.8
    Food aid2.
    Emergency relief4.23 73.53.0335.14.13.8
    Debt forgiveness3.
    By purpose of aid2
    Social and administrative infrastructure27.831.229.830.731.331.231.933.2
    Of which
    Health and population3.
    Economic infrastructure21.723.423.923.618.317.817.415.7
    Program assistance8.
    Debt relief311.
    Emergency aid4.
    Administrative expenses4.
    By tying status4
    Partially untied3.
    Source: OECD.

    In terms of regional distribution, the main recipients of ODA continued to be Asia (37 percent of total ODA) and sub-Saharan Africa (31 percent), although both regions are now receiving somewhat lower shares of total ODA compared with their average for the mid-1990s (see Table A1.3). Across income groups, low-income countries’ share in total ODA has increased since 1999, as HIPCs attracted a larger portion of the ODA flows. At the same time, the share of middle-income and transition economies in total ODA net disbursements fell from 43 percent in 1999 to about 40 percent in 2001.

    Around 17 percent of ODA provided in 2000 represented tied aid, a reversal of a declining trend over the three preceding years. The share of tied aid in total ODA continued to increase in 2001, to about 18 percent. Partially tied aid, although a small part of ODA, also increased slightly between 2000 and 2001.

    Aid Outlook

    The prospects for aid flows to developing countries in the coming years will depend importantly on the implementation and the support by DAC countries of two recent international initiatives. The first relates the adoption by low-income countries of Poverty Reduction Strategy Papers (PRSPs) as the tool for devising key national policies aimed at reducing poverty and promoting growth. The second concerns the commitment to help low-income countries achieve the MDGs.

    PRSPs are expected to serve as the operational framework through which a country identifies specific priorities, which often require donor resources. By allowing for the involvement of a wide range of stakeholders, PRSPs are also expected to contribute to better implementation and monitoring of aid programs, and they have become the basis for the provision of concessional assistance by the IMF and World Bank. OECD countries have adopted guidelines on poverty reduction and policy coherence that support the PRSP approach.31 There are indications that these developments have already had an impact on the allocation of aid, as evidenced in the higher share of ODA to least developed countries and for social expenditures in 2000–01 (see Tables A1.3 and A1.5, respectively).

    As more countries begin implementing their poverty-reduction strategies, donors should be in a position to increase their financing to those countries with credible strategies that reflect wide civil society participation, display country ownership, and identify more explicitly the country’s financing needs.32 The form of ODA may also be affected, with further possible declines in nongrant ODA and reductions in tied aid.33 At the same time, to the extent that donors allocate ODA to those countries with the strongest policy efforts to reduce poverty and increase growth, country allocations can also be expected to shift over time. While it is at present too early to ascertain possible effects on ODA flows, outcomes described above are likely, provided that major donor countries adhere to the current international consensus on aid policy.

    The MDGs have become the international community’s main targets in the fight against poverty.34 The MDGs were reaffirmed at the Millennium Summit in September 2000 and there is now a growing impetus to utilize them as targets for assessing progress in reducing poverty. Most recently, at the March 2002 Monterrey conference, donor countries confirmed their commitment to helping developing countries achieve the MDGs and other international targets.

    Satisfactory progress toward the MDGs implies substantial net increases in ODA to developing countries, according to several recent studies. Estimates by the World Bank and the UN suggest that extra ODA on the order of

    40–60 billion a year is needed to meet the MDGs, in addition to the roughly
    50 billion already being provided to developing countries.35 The studies nonetheless stress that financial assistance is only one of many inputs required to reach the MDGs, and that extra assistance would need to be accompanied by strong efforts in recipient countries to reform economic policies and improve service delivery. A major review by the OECD of the prospects for reaching the MDGs has similarly emphasized the need for developing countries to establish an environment conducive for growth and poverty reduction through good governance, sound economic management, and the implementation of high-quality poverty-reduction strategies.36

    Reflecting in part efforts to make progress toward the MDGs, several bilateral donors have announced their intentions to increase ODA in the years ahead. For example, EU members have committed to raise their collective ODA to 0.39 percent of GNI by 2006, with all members aiming to attain a level of at least 0.33 percent by that time. Some countries such as the Netherlands and Norway, which target a given ODA/GNI ratio, will continue to provide real increases that match their rates of economic growth. The United States has announced plans for a

    5 billion increase in its core development assistance by 2006, an increase of close to 50 percent from the 2000 levels. G-8 donors, during their June 2002 summit, reaffirmed their willingness to ensure that countries genuinely committed to poverty reduction, good governance, and economic reform will not be denied the chance of achieving the MDGs solely through lack of finance.37 Taken together, by 2006, these recent commitments could raise ODA levels by a total of
    12 billion a year.


    The HIPC Initiative was launched by the IMF and the World Bank in 1996 as the first comprehensive effort to reduce unsustainable debt in the world’s poorest, most heavily indebted countries.38 It was enhanced in the fall of 1999, and aims at reducing the net present value (NPV) of debt at the decision point to a maximum of 150 percent of exports, or for very open economies, to 250 percent of central government revenue.

    To demonstrate their capacity to pursue sound economic policies with a focus on poverty reduction, eligible countries are required to establish a satisfactory track record under their IMF- and IDA-supported economic reform and poverty reduction programs. Once a satisfactory track record has been established, a debt sustainability analysis (DSA) is carried out jointly by the HIPC authorities, the IMF, and the World Bank. The country qualifies for HIPC relief if its ratio of the NPV of debt to exports or revenue is greater than the HIPC threshold as defined above. Based on the results of DSA, the Executive Boards of the IMF and the Bank formally decide on the country’s qualification for debt relief—that is, the decision point is reached. Debt relief and other assistance begin flowing as soon as the decision point is reached, with the amount based on the country’s immediate needs and capacity for channeling the funds to poverty-reducing purposes. At the completion point, when specific measures needed to strengthen poverty reduction efforts and macroeconomic management have been implemented, creditors provide the remainder of the committed debt relief on the basis of their overall exposure.

    Progress in Implementation39

    Thirty-eight countries are expected to qualify for assistance under the enhanced HIPC Initiative, most of which are in sub-Saharan Africa. As of end-November 2003, 27 countries had reached their decision points under the enhanced framework (Benin, Bolivia, Burkina Faso, Cameroon, Chad, the Democratic Republic of the Congo, Ethiopia, The Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Sao Tomé and Príncipe, Senegal, Sierra Leone, Tanzania, Uganda, and Zambia). Of these countries, eight (Benin, Bolivia, Burkina Faso, Mali, Mauritania, Mozambique, Tanzania, and Uganda) had reached their completion points, at which time the debt relief became irrevocable, with total committed assistance estimated at some

    8.3 billion in NPV terms (Table A2.1).

    Table A2.1.HIPC Initiative: Status of Country Cases Considered, November 30, 2003
    Target NPV of Debt-to-Assistance Levels1

    (Millions of U.S. dollars, present value)
    Percentage Reduction in NPV of Debt2Estimated Total Nominal Debt Service Relief (Millions of U.S. dollars)
    Decision PointCompletion PointExportsGovernment revenue
    (Percent)TotalBilateralMultilateralIMFWorld Bank
    Completion point reached under enhanced framework
    BeninJul. 2000Mar. 200315026577189248431460
    Original frameworkSep. 1997Sep. 1998225448157291295414760
    Enhanced frameworkFeb. 2000Jun. 200115085426858555140301,300
    Burkina Faso5538346957231930
    Original frameworkSep. 1997Jul. 200020522932196229127400
    Enhanced frameworkJul. 2000Apr. 200215019535161227930300
    Topping-upApr. 200215012916112146124230
    Original frameworkSep. 1998Sep. 2000200121378414439220
    Enhanced frameworkSep. 2000Mar. 20031504171322854514329675
    MauritaniaFeb. 2000Jun. 200213725062226136147100501,100
    Original frameworkApr. 1998Jun. 19992001,7171,076641125381633,700
    Enhanced frameworkApr. 2000Sep. 2001150306194112186227600
    TanzaniaApr. 2000Nov. 20011502,0261,0061,020120695543,000
    Original frameworkApr. 1997Apr. 1998202347732746916020650
    Enhanced frameworkFeb. 2000May 200015065611054691357371,300
    Decision point reached under enhanced framework
    CameroonOct. 2000Floating1501,26087432437179272,000
    ChadMay 2001Floating15017035134186830260
    Congo, Democratic Rep. ofJul. 2003Floating1506,3113,8372,4744728318010,389
    EthiopiaNov. 2001Floating1501,27548276334463471,930
    Gambia, TheDec. 2000Floating1506717492222790
    GhanaFeb. 2002Floating692502,1861,0841,102112781563,700
    GuineaDec. 2000Floating1505452153283115232800
    Guinea-BissauDec. 2000Floating150416212204129385790
    Original frameworkDec. 1997May 199910728025691165352724440
    Enhanced frameworkNov. 2000Floating150250329129200404140590
    HondurasJul. 2000Floating110250556215340309818900
    MadagascarDec. 2000Floating15081445735722252401,500
    MalawiDec. 2000Floating15064316348030331441,000
    NicaraguaDec. 2000Floating1503,2672,1451,12382189724,500
    NigerDec. 2000Floating1505212113092817054900
    RwandaDec. 2000Floating150452563974422871800
    São Tomé and PrincipeDec. 2000Floating1509729682483200
    SenegalJun. 2000Floating1332504881932594512419850
    Sierra LeoneMar. 2002Floating15060020535412312280950
    ZambiaDec. 2000Floating1502,4991,1681,331602493633,850
    Preliminary HIPC document issued
    Côte d’IvoireMar. 19983141280345163182239164800
    Total assistance provided/committed31,42815,45615,8012,51657,22851,934
    Preliminary HIPC document issued
    Côte d’Ivoire6912502,5691,027918166438373,900
    Sources: IMF and World Bank Board decisions, completion point documents, decision point documents, preliminary HIPC documents, and staff calculations.
    Impact of HIPC Debt Relief

    In combination with traditional debt relief and pledges of additional bilateral debt forgiveness, the external indebtedness of the 27 countries that reached their decision points will be reduced by almost two-thirds in NPV terms (from

    77 billion to
    26 billion), bringing their indebtedness to levels below the average for all developing countries. Preliminary evidence also indicates that annual net resource transfers, defined as new loans and grants minus debt-service payments for the public sector, to most of the 27 decision point countries increased in 2001 compared with levels observed during 1997–2000.

    This reflected in part the resumption of IMF and IDA support to several countries during this period, as well as delivery of debt relief.

    Debt-service payments by the 27 countries that have either reached their completion points or are in their interim periods averaged

    3.5 billion during 1998–99 and are projected to be reduced by almost one-third as a result of HIPC relief to an average of
    2.4 billion in 2001–05. The Initiative will lower debt-service payments for the 27 HIPCs on average from 16 percent of exports to 8 percent during 2001–05—less than half that of other developing countries (see Table 5.1).

    Debt relief under the HIPC Initiative in part enables recipient countries to increase social expenditures. Spending on health and education in the 27 HIPCs is estimated to have risen by over 30 percent (

    1 billion a year) between 1999 and 2002. In relation to GDP, social spending is projected to rise from 6 percent of GDP to 9 percent for these countries as a group. Overall social spending by the 27 HIPCs in 2002 is estimated to have exceeded debt-service payments by a factor of close to four.

    Projected Costs

    Based on the most recent available information, the total cost of assistance under the HIPC Initiative to 34 countries40 is estimated at

    39.4 billion in 2002 NPV terms, divided roughly equally between bilateral and multilateral creditors. The IMF’s share is
    2.9 billion in 2002 NPV terms. An estimated
    33.3 billion (over 80 percent of the total cost for 34 countries in 2002 NPV terms) has been committed to the 27 decision point countries. About 80 percent of the cost to multilateral creditors and 65 percent of the cost to bilateral creditors reflect commitments already made to these countries.

    As a result of the deterioration in exports following the recent global downturn, the NPV of debt-to-export ratios at the completion point may be higher than the projections at the decision point for some 8–10 HIPCs. In total, the debt of these countries (in NPV terms), after taking into account additional debt forgiveness already announced by a number of bilateral creditors, may exceed the HIPC thresholds at the completion point by some

    0.5–0.9 billion. About
    0.4 billion of this had already been projected in the decision point documents. The possibility exists to provide “topping up” at the HIPC completion point, as was recently done for Burkina Faso, if exogenous factors have caused fundamental changes in countries’ underlying economic circumstances. However, topping up is not meant to compensate for slippages in the implementation of policy reforms and/or imprudent external borrowing in the interim period.

    Status of Creditor Participation

    Multilateral creditors account for

    19.0 billion of the
    39.4 billion in total costs estimated for the HIPC Initiative in 2002 NPV terms. Nearly all multilateral creditors have agreed to participate in the HIPC Initiative and all the major creditors have committed to provide interim relief. Almost all have pledged irrevocable debt relief to countries that have reached their completion points. IDA, the IMF, the AfDB, and the IDB are the largest multilateral creditors, and are all also providing assistance to countries that have reached their decision points. So far, multilateral creditors have delivered over
    3.8 billion in relief, with disbursements under the original HIPC framework accounting for almost 70 percent of that amount.

    Paris Club creditors are estimated to account for 38.6 percent (

    15.2 billion) of the total cost of the HIPC Initiative in 2002 NPV terms. They are participating fully in the enhanced HIPC Initiative and have committed about
    12.5 billion to the 27 decision point countries. The majority of Paris Club creditors have committed to provide debt relief above and beyond the HIPC Initiative, which will further reduce the HIPCs’ average NPV of debt-to-exports ratio by about 20 percentage points after full delivery of the assistance.

    Non-Paris Club official bilateral creditors are required to deliver 8.6 percent of the total cost of relief (

    3.4 billion in 2002 NPV terms). Most of this (
    3.0 billion) reflects costs for the 27 decision point HIPCs. To date, commitments by the creditors that have agreed to provide relief to the 27 decision point countries amount to about 50 percent of the
    3.3 billion cost for the decision point HIPCs, but few of these creditors have actually delivered relief. Although the recent progress is encouraging, there are still 24 creditor countries that have not yet expressed their intention to provide relief. Participation by all creditors and the prompt delivery of the required debt relief by these creditors has become a pressing issue, especially for countries that have already reached their completion points.

    Commercial creditors’ claims on the 27 decision point HIPCs amount to approximately

    1.4 billion in NPV terms after traditional relief, and the cost to these creditors of participating in the enhanced HIPC framework is estimated to be about
    0.8 billion (2 percent of total costs) in 2002 NPV terms. The most common method of retiring commercial claims is the IDA-administered commercial debt reduction facility, which provides grant financing and logistical support to HIPCs to conduct commercial debt-buyback operations. This facility has so far been successful in retiring some
    6.8 billion in principal and interest payments due to the commercial creditors of HIPCs. But aside from the buyback option, very few commercial creditors have agreed to provide even limited debt relief under the enhanced HIPC Initiative. Securing their participation in the HIPC Initiative will require an extra effort by the international community.

    Increasing the participation of creditors, especially non-Paris Club official bilateral and commercial creditors, remains a challenge for the successful implementation of the HIPC Initiative, especially for creditors with which the World Bank and the IMF have infrequent or little communication. The international community is limited in its ability to secure creditor participation because the Bank’s and the IMF’s decisions on the HIPC Initiative are not binding on creditors and the Paris Club’s Agreed Minutes create no obligations on the part of non-Paris Club creditors. The noncooperation of these creditors would have adverse implications for the debt sustainability of HIPCs. It is thus important that HIPCs engage actively in a constructive dialogue with their non-Paris Club official bilateral and commercial creditors and seek debt relief within the framework of the enhanced HIPC Initiative.


    The assessment of fiscal and external sustainability is a key element in the IMF’s work on member countries. The IMF’s advice on macroeconomic policies and decisions on access to Fund resources depend crucially on judgments about debt sustainability. This is particularly so in the case of emerging market economies that are highly integrated into global capital markets.

    With a view to strengthening the IMF’s role in crisis prevention, the Executive Board adopted in June 2002 a strengthened framework for assessing debt sustainability in emerging market economies.41 The methodology will be applied on a progressive basis, principally for requests for use of IMF resources and in the context of IMF surveillance of members with significant market access.

    Components of Debt Sustainability Analysis

    The assessment of debt sustainability implies the need to project the evolution of the stocks of liabilities over time. A number of factors, which are multidimensional and interconnected, influence such projections, including exchange rate dynamics, macroeconomic and financial developments, the external environment, and the linkages between governments, households, financial institutions, and corporations. These key factors inform various assessments of sustainability—external sustainability, fiscal sustainability, and financial sector stability. The relative importance of different factors, and the type of assessment that they inform, depends to a large extent on the individual country’s characteristics.

    The analysis of external sustainability involves judgments about the availability of financing for the current account through private and official capital inflows, projections of the medium-term balance of payments and the associated debt dynamic, and assessments about the appropriate exchange rate policy and level.

    The assessment of fiscal sustainability—with the aim of determining whether the existing fiscal stance is consistent with a stable debt-to-GDP ratio—focuses on indicators of public debt and deficits and medium-term fiscal projections. Generally speaking, the fiscal analysis should include all public institutions with the ability to contract debt. This is particularly important in countries where public entities have access to capital markets without explicit government guarantees. In addition, government contingent liabilities should be identified and a separate assessment made of the likelihood that they will be called.

    Financial sector stability analysis has taken a more prominent place in the IMF’s macroeconomic framework after the experience of the past decade. The cornerstone of this focus is the Financial Sector Assessment Programs (FSAPs) undertaken jointly by the IMF and the World Bank. FSAPs seek to understand the vulnerabilities and development challenges facing the financial system with the ultimate objective of reducing the likelihood and severity of financial crises.

    There are key interactions between the stability of the financial system and the sustainability of the public and external debt. On the one hand, the government is seen as the ultimate guarantor (explicit or implicit) of the financial system and is, therefore, confronted with potentially large contingent liabilities in the face of widespread bank insolvencies. On the other hand, since government securities constitute a large portion of financial institutions’ assets, an unsustainable stock of government debt could cause broader financial instability.

    A Framework for Assessing Debt Sustainability

    The framework for assessing debt sustainability attempts to integrate external, fiscal, and financial sector elements, in a systematic fashion. The analysis is built upon the medium-term projections that provide the basis for IMF programs. In addition, this framework incorporates a set of sensitivity tests that help examine the debt implications of alternative assumptions regarding policy variables, macroeconomic developments, and costs of financing. The assessments are expected to be especially useful for countries on the brink or in the midst of a crisis, and countries in the aftermath of a default. However, they are also expected to help identify how a country may become subject to insolvency issues even if it is not facing an imminent crisis, and examine the debt dynamics in program projections.

    Assessments of sustainability are probabilistic by nature, since one can normally envisage some states of the world under which a country’s debt would be sustainable and others in which it would not. The analytical framework does not supply these probabilities but traces the implications of alternative scenarios. In practice, the analysis of different scenarios requires the determination of certain thresholds at which key variables would signal the danger of debt becoming unsustainable.42 Further research will be needed to identify such empirical thresholds for particular groups of countries. Naturally, any numeric exercise needs to be undertaken in the context of other variables, such as the structure of debt, interest rates spreads, shape of yield curves, and access to new borrowing, among other factors.

    Under this framework, the external sustainability assessment is based on historical data and up to 10 years of projections of the current account balance and of non-debt-creating inflows (FDI, portfolio investment, and transfers). Similarly, the fiscal sustainability analysis focuses on the expected behavior of the primary deficit and non-debt-creating flows (grants and privatization receipts). Data on deflators, interest rates (external and domestic), and exchange rates are also at the center of the analysis. Financial sector stability is taken into account implicitly in the projections underlying the external and fiscal assessments.

    Two kinds of sensitivity tests are undertaken. The first shows the ambitiousness of the baseline scenario relative to historical experience, by projecting the debt-to-GDP ratio using past averages for interest rates, deflators, current account (or primary balance in the fiscal case), and noninterest flows, and comparing the outcome to that under the baseline scenario. The other sensitivity tests consider adverse two-standard deviation shocks lasting two years to each of the key parameters in turn, and a one-standard deviation combined shock. Ideally, standard deviations used in the exercise should be estimated from historical data of the previous 10 years or more. In the absence of sufficient information, cross-country parameters may need to be used as an alternative. Finally, an additional scenario of a 30 percent real exchange rate depreciation is considered as well.

    The evaluation of the sensitivity tests highlights some tricky empirical issues that call for added judgment: (1) sufficiently large shocks will cause almost any country’s debt dynamics to appear unsustainable; (2) some shocks may be correlated; and (3) historical data may be limited, or the relevant horizon for calculating means and standard deviations may be unclear if a country is undertaking important structural changes. In some cases, calibration of shocks may be necessary, especially if the implied shocks are large. The subsequent analysis of the stress test results must, therefore, be based on relevant factors and key variables in each individual case, as no single indicator or test can fully inform debt sustainability.

    appendix iv GLOSSARY OF TERMS

    Agreed Minute. Paris Club document detailing the terms of a rescheduling between creditors and the debtor. It specifies the coverage of debt-service payments (types of debt treated), the cutoff date, the consolidation period (in the case of a flow rescheduling), the proportion of payments to be rescheduled, the provisions regarding any downpayment, and the repayment schedules for rescheduled and deferred debt. Representatives in the Paris Club commit to recommending these terms to their governments for the bilateral agreements negotiated with the debtor government that implements the Agreed Minute. Paris Club creditors will agree to reschedulings only with countries that have an IMF upper credit tranche arrangement (Stand-By Arrangement or EFF), a PRGF arrangement, or a Rights Accumulation Program (RAP).

    Arrears. Unpaid or overdue payments. In the context of export credits, arrears are overdue payments by borrowers that have not yet resulted in claims on export credit agencies.

    BIS. Bank for International Settlements. Established in 1930, BIS is an international organization that fosters international monetary and financial cooperation and serves as a bank for central banks.

    Berne Union (International Union of Credit and Investment Insurers). An association founded in 1934 of export credit insurance agencies, all participating as insurers and not as representatives of their governments. The main purposes of the Union are to work for sound principles of export credit insurance and maintenance of discipline in the terms of credit in international trade. To this end, members exchange information and furnish the Union with information on their activities, consult with each other on a continuing basis, and cooperate closely.

    Bilateral Paris Club agreements. Agreements reached bilaterally between the debtor country and agencies in each of the creditor countries participating in a Paris Club rescheduling. These agreements put into effect the debt restructuring set forth in the Agreed Minute and are legally the equivalent of new loan agreements.

    Bilateral official creditors. The creditors are governments. Their claims are loans extended, insured, or guaranteed by governments or official agencies, such as export credit agencies. Certain official creditors participate in debt reschedulings under the aegis of the Paris Club.

    Bilateral deadline. In the context of Paris Club reschedulings, the date by which all bilateral agreements must be concluded. It is set in the Agreed Minute and is typically around six months after conclusion of the Agreed Minute, but it can be extended upon request.

    Brady Plan. Approach adopted in the late 1980s to restructure debt to commercial banks that emphasizes voluntary market-based debt- and debt-service reduction (DDSR) operations. The main feature of the DDSR operations is the menu of options offered to creditors, which consists of some combination of a buyback at a significant discount, and the issuance of “Brady bonds” by the debtor country in exchange for banks’ claims. Such operations added to countries’ efforts to restore external viability through the adoption of medium-term structural adjustment programs supported by the IMF and other multilateral and official bilateral creditors.

    Buyback. The purchase by a debtor of its own debt, usually at a substantial discount. The debtor reduces its obligations while the creditor receives a once-and-for-all payment.

    Buyers’ credit. A financial arrangement in which a bank or financial institution, or an export credit agency in the exporting country, extends a loan directly to a foreign buyer or to a bank in the importing country to finance the purchase of goods and services from the exporting country.

    CAF. Corporación Andina de Fomento. The CAF is a multilateral financial institution whose mission is to promote the sustainable development of its shareholder countries and regional integration. It serves the public and private sectors, providing multiple financial services to a broad customer base composed of the governments of shareholder countries, public and private companies, and financial institutions. Its policies incorporate social and environmental variables, and it includes efficiency and sustainability criteria in all its operations.

    Cancellation of a loan. An agreed reduction in the undisbursed balance of a loan commitment.

    Capitalized interest. Scheduled interest payments that are converted, through an agreement made with the creditor, into debt. Rescheduling agreements sometimes provide for the capitalization of (some percentage of) interest due during the consolidation period.

    Capitalization of moratorium interest option. Option under concessional Paris Club reschedulings where creditors effect the required NPV debt relief through a reduction in the applicable interest rate (but a lower reduction than in the debt-service reduction option) and with a partial capitalization of moratorium interest. This option is chosen by creditors only rarely (see concessional rescheduling).

    Claims payments. Payments made to exporters or banks, after the claims-waiting period, by an export credit agency on insured or guaranteed loans, when the original borrower or borrowing-country guarantor fails to pay. This is recorded by the agencies as an unrecovered claim.

    Claims-waiting period. The period that exporters or banks must wait after arrears occur before the export credit agency will pay on the corresponding claim.

    Cofinancing. The joint or parallel financing of programs or projects through loans or grants to developing countries provided by commercial banks, export credit agencies, or other official institutions in association with other agencies or banks, or the World Bank and other multilateral financial institutions.

    Cologne terms. See concessional rescheduling.

    Commercial credit. In the context of the Paris Club, loans originally extended on terms that do not qualify as ODA credits. These are typically export credits on market terms or have a relatively small grant element.

    Commercial interest reference rates (CIRRs). A set of currency-specific interest rates for major OECD countries. These rates are determined monthly based on the secondary market yield on government bonds.

    Commercial risk. In the context of export credits, the risk of nonpayment by a nonsovereign or private sector buyer or borrower in his home currency arising from default, insolvency, and/or failure to take up goods that have been shipped according to the supply contract (contrasted with transfer risk arising from an inability to convert local currency into the currency in which the debt is denominated, or broader political risk).

    Commitment. In the context of export credits, a contractual obligation by an export credit agency to lend, guarantee, or insure resources under specified financial terms and conditions and for specified purposes for the benefit of an importer. In the context of data reported by export credit agencies, the total amount of loans excluding amounts that are in arrears or on which claims have been paid, usually includes principal and contractual interest payable by the importing country on disbursed and undisbursed credits, and sometimes includes not only liabilities of the agency but also uninsured parts of the loan. Therefore, reported commitments are almost always larger than the face value of the loan, and sometimes larger than the agency’s total exposure.

    Commitment charge (or fee). This is the charge made for holding available the undisbursed balance of a loan commitment. Typically it is a fixed rate charge (e.g., 1.5 percent per annum) calculated on the basis of the undisbursed balance.

    Comparable treatment. An understanding in a debt restructuring agreement with the Paris Club creditors that the debtor will secure at least equivalent debt relief from other creditors.

    Completion point. In the context of the HIPC Initiative, a point at which the country concerned completes a set of structural adjustment and poverty reduction measures in the context of IMF- and World Bank-supported programs after reaching the decision point (see decision point) and the debt relief committed by the international community becomes irrevocable.

    Concessionality level. See grant element.

    Concessional rescheduling. Rescheduling of debt with partial debt reduction. In the context of the Paris Club, concessional rescheduling terms have been granted to low-income countries since October 1988 with a reduction in the net present value (NPV) of eligible debt of up to one-third (Toronto terms); since December 1991 with an NPV reduction of up to half (London terms or “enhanced concessions” or “enhanced Toronto” terms); and since January 1995 with an NPV reduction of up to two-thirds (Naples terms). In the context of the HIPC Initiative, creditors agreed in November 1996 to increase the NPV reduction up to 80 percent (Lyon terms). In November 1999, the concessionality of such debt relief operations was increased to 90 percent debt reduction in NPV terms (Cologne terms). Such reschedulings can be in the form of flow reschedulings or stock-of- debt operations. While the terms (grace period and maturity) are standard, creditors can choose from a menu of options to implement the debt relief. For full details, see Table A5.1 and Figure A5.1.

    Consensus. See OECD Consensus.

    Consolidated amounts or consolidated debt. The debt-service payments and arrears, or debt stock, rescheduled under a Paris Club rescheduling agreement (see Tables A5.2, A5.3, and A5.4).

    Consolidation period. In Paris Club rescheduling agreements, the period in which debt-service payments to be rescheduled (the “current maturities consolidated”) fall due. The beginning of the consolidation period may precede, coincide with, or come after the date of the Agreed Minute. The end of the consolidation period is generally the end of the month in which the IMF arrangement, on the basis of which the rescheduling takes place, expires.

    Cover. Provision of export credit guarantee/insurance against risks of payments delays or nonpayments relating to export transactions. Cover is usually, though not always, provided both for commercial risk and for political risk. In most cases, cover is not provided for the full value of future debt-service payments; the percentage of cover typically is between 90 percent and 95 percent. (See also quantitative limits.)

    Coverage. In the context of rescheduling agreements, the debt service or arrears rescheduled. Comprehensive coverage implies the inclusion of most or all eligible debt service and arrears.

    Credit guarantee. Commitment by an export credit agency to reimburse a lender if the borrower fails to repay a loan. The lender pays a guarantee fee. While guarantees could be unconditional, they usually have conditions attached to them, so that in practice there is little distinction between credits that are guaranteed and credits that are subject to insurance.

    Credit insurance. The main business of most export credit agencies is insurance of finance provided by exporters or commercial creditors (though some major agencies lend on their own account). Insurance policies provide for the export credit agency to reimburse the lender for losses up to a certain percentage of the credit covered and under certain conditions. Lenders or exporters pay a premium to the export credit agency. Insurance policies typically protect the lender against political or transfer risks in the borrowing country that prevent the remittance of debt service payments.

    Current maturities. In the context of rescheduling agreements, principal and interest payments falling due in the consolidation period.

    Cutoff date. The date (established at the time of a country’s first Paris Club rescheduling) before which loans must have been contracted in order for their debt service to be eligible for rescheduling. New loans extended after the cutoff date are protected from future rescheduling (subordination strategy). In exceptional cases, arrears on post-cutoff date debt can be deferred over short periods of time in rescheduling agreements.

    De minimis creditors (or clause). Minor creditors that are exempted from debt restructuring to simplify implementation of the Paris Club rescheduling agreements. Their claims are payable in full as they fall due. An exposure limit defining a minor creditor is included in each Agreed Minute, typically ranging from zero to SDR 1 million of consolidated debt.

    Debt- and debt-service reduction (DDSR) operations. Debt restructuring agreements typically between sovereign states and consortia of commercial bank creditors involving a combination of buyback, and exchange of eligible commercial debt for financial instruments at a substantial discount (simple cash buyback) or for new bonds featuring a net present value reduction. In some instances, the principal portion of new financial instruments is fully collateralized with U.S. Treasury zero-coupon bonds, while interest obligations are also partially secured. DDSR agreements are characterized by a “menu approach,” allowing individual creditors to select from among several DDSR options. Under the Brady Plan of March 1989, some of these arrangements have been supported by loans from official creditors.

    Debt-equity swap. An arrangement that results in the exchange of debt claims, usually at a discount, for equity in an enterprise. An investor purchases the title to a foreign currency-denominated debt in a secondary market at a substantial discount. Under the debt-equity swap program, the debtor country government will exchange the debt for local currency. The investor will then carry out an approved equity investment project. The difference between the face value and the market value of the debt provides an incentive to the investor.

    Debt-for-debt swap. Such swaps involve a change of creditor without otherwise changing the terms of repayment of their respective loans. They may involve external or domestic creditors.

    Debt-for-development swap. Financing part of a development project by the exchange of a foreign currency-denominated debt for local currency, typically at a substantial discount. The process normally involves a foreign nongovernmental organization (NGO) that purchases the debt from the original creditor at a substantial discount using its own foreign currency resources, and then resells it to the debtor country government for the local currency equivalent (resulting in a further discount). The NGO in turn spends the money on a development project, previously agreed upon with the debtor country government.

    Debt-for-local-currency swap. Local residents, instead of a foreign investor, buy their own currency’s debt in the secondary market using funds they hold abroad or foreign currency acquired in the exchange market. These swaps are designed primarily for the repatriation of flight capital.

    Debt-for-nature swap. Similar to a debt for development swap, except that the funds are used for projects that improve the environment.

    Debt forgiveness or debt reduction. The extinction of a debt, in whole or in part, by agreement between debtor and creditor. Debt reduction in the context of concessional reschedulings from the Paris Club is applied to the net present value of eligible debt.

    Debt reduction option. Option under concessional Paris Club reschedulings where creditors effect the required debt relief in net present value terms through a reduction of the principal of the consolidated amount. A commercial interest rate and standard repayment terms apply to the remaining amounts. (See concessional rescheduling).

    Debt refinancing. Procedure by which overdue payments or future debt-service obligations on an officially supported export credit are paid off using a new “refinancing” loan. The refinancing loan can be extended by the export credit agency, by a governmental institution, or by a commercial bank, and in the latter case will carry the guarantee of the export credit agency.

    Debt rescheduling. See rescheduling.

    Debt restructuring. Any action by a creditor that alters the terms established for repayment of debt in a manner that provides for smaller near-term debt-service obligations (debt relief). This includes rescheduling, refinancing, debt and debt service reduction operations, buybacks, and forgiveness.

    Debt service (-to-exports) ratio. A key indicator of a country’s debt burden. Scheduled debt service (interest and principal payments due) during a year expressed as a percentage of exports (typically of goods and nonfactor services) for that year.

    Debt-service reduction option. Option under concessional Paris Club reschedulings where creditors effect the required debt relief in net present value terms through a reduction in the applicable interest rate. (See concessional rescheduling.)

    Debt sustainability. As defined in the context of the enhanced HIPC Initiative, the position of a country when the net present value (NPV) of (public and publicly guaranteed) debt to exports is below 150 percent. For highly open economies (indicated by an exports-to-GDP ratio of at least 30 percent) making a strong fiscal effort (expressed by a fiscal revenue-to-GDP ratio of at least 15 percent) the threshold is equivalent to an NPV of debt-to-revenue ratio of 250 percent.

    Debt sustainability analysis (DSA). A study of a country’s long-term debt situation jointly undertaken by the staffs of the IMF and the World Bank and the country concerned, in consultation with creditors. A country’s eligibility for support under the HIPC Initiative is determined on the basis of such an analysis.

    Debtor Reporting System (DRS). Statistical reporting system maintained by the World Bank to monitor the debt of developing countries on the basis of reports from debtor countries. It is the basis for the annual World Bank report, Global Development Finance (formerly, World Debt Tables).

    Decision point. In the context of the HIPC Initiative, point at which a country’s eligibility for assistance under the HIPC Initiative is determined based on the debt sustainability analysis. In order to reach a decision point, a country needs to establish a credible track record in the context of an IMF- and World Bank-supported program, while receiving a flow rescheduling on Naples terms from Paris Club creditors and comparable treatment from other official bilateral and commercial credits. The international community enters into a commitment at the decision point to deliver assistance at the completion point provided the debtor adheres to its policy commitments.

    Deferred payments. In the context of Paris Club reschedulings, obligations that are not consolidated but postponed nonconcessionally, usually for a short period of time, as specified in the Agreed Minute.

    Development Assistance Committee (DAC) of the OECD. Established in 1960 as the Development Assistance Group with the objective to expand the volume of resources made available to the developing countries and to improve their effectiveness. The DAC periodically reviews both the amount and nature of its members’ contributions to aid programs, both bilateral and multilateral. The DAC does not disburse assistance funds directly but is concerned instead with the promotion of increased assistance efforts by its members. The members of the DAC are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, the United States, and the Commission of the European Communities.

    Effectively rescheduled debt. The proportion of total payments covered by a rescheduling agreement that is rescheduled or deferred until after the consolidation period.

    Eligible debt or debt service. In the context of the Paris Club, debt that can be rescheduled, namely debt contracted before the cutoff date with maturities of one year or longer.

    Enhanced concessions (or enhanced Toronto terms). See concessional rescheduling.

    Enhanced Structural Adjustment Facility (ESAF). See Structural Adjustment Facility (SAF).

    Escrow accounts. Accounts in offshore banks (outside the debtor country) through which a portion of the export proceeds of a debtor is channeled to cover future debt-service payments. Creditors thus obtain extra security for their loans and effective priority on debt service.

    Export credit. A loan extended to finance a specific purchase of goods or services from within the creditor country. Export credits extended by the supplier of goods are known as suppliers credits; export credits extended by the supplier’s bank are known as buyers credits. (See also officially supported export credits.)

    Exposure. In the context of export credits, the total amount of debt of a country held by an export credit agency, including commitments, arrears, and unrecovered claims. Implicitly, a measure of the total possible financial cost to the agency of a complete default by the borrowing country.

    Extended Fund Facility (EFF). An IMF lending facility established in 1974 to assist member countries in overcoming balance of payments problems that stem largely from structural problems and require a longer period of adjustment. A member requesting an extended arrangement outlines its objectives and policies for the whole period of the arrangement (typically 3 years) and presents a detailed statement each year of the policies and measures to be pursued over the next 12 months. The phasing and performance criteria are comparable to those of Stand- By Arrangements, although phasing on a semiannual basis is possible. Countries must repay EFF resources over 10 years including a grace period of 4 ½ years (see Stand-By Arrangement).

    Flow rescheduling. In the context of the Paris Club, the rescheduling of specified debt service falling due during the consolidation period, and, in some cases, of specified arrears outstanding at the beginning of the consolidation period. (See stock-of-debt operation.)

    Goodwill clause. Clause used in Paris Club agreements under which creditors agree in principle, but without commitment, to consider favorably subsequent debt relief agreements for a debtor country that remains in compliance with the rescheduling agreement as well as its IMF arrangement and that has sought comparable debt relief from other creditors. The clause can be for a future flow rescheduling or a stock-of-debt operation.

    Grace period and maturity. During the grace period of a loan, no principal repayments (amortization) need to be made, only interest payments are due. Maturity refers to the total repayment period, including the grace period. In the context of Paris Club reschedulings, periods until the first and last payment dates are measured typically from the mid-point of the consolidation period.

    Graduated payments (or “blended payments”). In the context of Paris Club rescheduling, the term refers to a repayment schedule where principal repayments (and therefore total payments) gradually increase over the repayment period reflecting an expected improvement in the repayment capacity of a debtor country. Creditors have made increasing use of the graduated payments replacing flat payment schedules where equal amounts of principal repayments were made over the repayment period.

    Grant element. Measure of concessionality of a loan, calculated as the difference between the face value of the loan and the sum of the discounted future debt-service payments to be made by the borrower expressed as a percentage of the face value of the loan.

    Grant-like flows. Transactions involving the sale of commodities against payment in the recipient country’s currency or loans in a foreign currency repayable in the recipient country’s currency. These transactions are treated as grants in the OECD/DAC statistics. They are, nevertheless, counted as external debt, since the creditor is nonresident.

    Heavily indebted poor countries (HIPCs). Group of 41 developing countries identified for analytical purposes in 1995: includes 32 countries with a 1993 GNP per capita of

    695 or less and 1993 present value of debt to exports higher than 220 percent or present value of debt to GNP higher than 80 percent (severely indebted low-income countries in the World Bank classification).

    Helsinki package. Agreement reached in 1978 by OECD participants of the Consensus limiting the use of tied-aid credits in certain countries to projects that would not be commercially viable without an aid element. The agreement also set up mechanisms for implementing the new rules. (See OECD Consensus.)

    HIPC Initiative—Debt Initiative for Heavily Indebted Poor Countries. Framework for action to resolve the external debt problems of heavily indebted poor countries (HIPCs) that was developed jointly by the IMF and the World Bank and was adopted in 1996 and revised in 1999. The Initiative envisages comprehensive action by the international financial community, including multilateral institutions, to assist eligible HIPCs achieve debt sustainability, provided a country builds a track record of strong policy performance.

    HIPC Trust Fund. Trust Fund administered by IDA to provide debt relief through grants to eligible HIPCs on debt owed to participating multilaterals. It will either prepay, or purchase a portion of the debt owed to a multilateral creditor and cancel such debt, or pay debt service as it comes due. The HIPC Trust Fund receives contributions from participating multilateral creditors and from bilateral donors. Contributions can be earmarked for debt owed by a particular debtor or to a particular multilateral creditor. Donors can also provide contributions to an unallocated pool and would participate in decisions regarding the use of these unallocated funds. The Trust Fund allows multilateral creditors to participate in the Trust Fund in ways consistent with their financial policies and aims to address the resource constraints for certain multilateral creditors. (See also PRGF-HIPC Trust.)

    Houston terms. See lower-middle-income country terms.

    IMF arrangement. Agreement between the IMF and a member country based on which the IMF provides financial assistance to a member country seeking to redress balance of payments problems and to help cushion the impact of adjustment. Nonconcessional resources are provided mainly under Stand-By Arrangements (SBAs) and the Extended Fund Facility (EFF), and concessional resources are provided under the Poverty Reduction and Growth Facility (PRGF).

    Implementing agreements. See bilateral Paris Club agreements.

    Interest rate swap. An agreement to swap the debt-servicing liability of a loan with a fixed interest rate with that of a loan with a variable interest rate. For example, a government of a developing country may be able to borrow at comparatively better terms at variable rates than at fixed rates, while for an enterprise in an industrial country the inverse may be true. As each may prefer its liabilities in the other form, they may therefore arrange a swap. Normally, the differential in the rates is insured with a broker to protect the more sound borrower.

    International Development Association (IDA). IDA is the concessional lending arm of the World Bank Group. IDA assistance is available to low-income member countries.

    Late interest. Interest accrued on principal and interest in arrears.

    London Club. A group of commercial banks that join together to negotiate the restructuring of their claims against a particular sovereign debtor. There is no organizational framework for the London Club comparable to that of the Paris Club.

    London terms. See concessional rescheduling.

    Long-maturities option. In the context of the Paris Club, a nonconcessional option in concessional reschedulings under which the consolidated amount is rescheduled over a long period of time but without a reduction in the net present value of the debt.

    Low-income countries. In the context of the Paris Club, countries eligible to receive concessional terms. The Paris Club decides eligibility on a case-by-case basis, but these include typically countries eligible to receive only highly concessional credits from the IDA (“IDA-only countries”).

    Lower-middle-income country terms (LMIC). In the context of the Paris Club, refers to the rescheduling terms granted, since September 1990, to lower-middle-income countries. These terms are nonconcessional, and provided originally for flat repayment schedules, but in recent years often graduated payment schedules have been agreed for commercial credits with up to 18-year maturities, including a grace period of up to 5 years. ODA credits are rescheduled over 20 years including a grace period of up to 10 years. This set of rescheduling terms also includes the limited use of debt swaps on a voluntary basis. Lower-middle-income countries are countries with a per capita GNI in 2001 of between

    746 and

    Lyon terms. See concessional rescheduling.

    Maturity. Grace period plus repayment period. See grace period and maturity.

    Middle-income countries. In the context of the Paris Club, countries not considered lower-middle-income or low-income. These countries receive nonconcessional rescheduling terms, originally with flat repayment schedules, but since the 1990s increasingly with graduated payment schedules that have a maturity of up to 18 years and a grace period of 2–3 years of commercial credits. Official development assistance credits are rescheduled over 10 years, including a grace period of 5–6 years. In the context of the World Bank classification, middle-income countries are those with a per capita GNI in 2001 of between

    746 and

    Mixed credits. Credits containing an aid element, either in the form of a grant or of a subsidized interest rate.

    Moratorium interest. Interest charged on rescheduled debt. In the Paris Club, the moratorium interest rate is negotiated bilaterally by the borrowing country with each individual creditor and therefore differs from one creditor to the next. In the London Club, where all creditors are deemed to have access to funds at comparable rates, the moratorium interest rate applies equally to all rescheduled obligations under a given agreement.

    Multilateral creditors. These creditors are multilateral institutions such as the IMF and the World Bank, and other multilateral development banks.

    Multiyear rescheduling agreements (MYRA). An agreement granted by official creditors, that covers consolidation periods of two or more years in accordance with multiyear IMF arrangements such as EFF and PRGF. It is carried out through a succession of shorter consolidations (tranches) that are implemented after certain conditions specified in the Agreed Minute are satisfied. The conditions generally include full implementation to date of the rescheduling agreement and the continued implementation of the IMF arrangements.

    Naples terms. See concessional rescheduling.

    Net (capital) flows. Loan disbursements minus principal repayments during the same period.

    Net present value (NPV) of debt. The discounted sum of all future debt-service obligations (interest and principal) on existing debt. Whenever the interest rate on a loan is lower than the discount rate, the resulting NPV of debt is smaller than its face value, with the difference reflecting the grant element. The discount rates used in the context of the HIPC Initiative reflect market interest rates.

    Net present value (NPV) of debt-to-exports ratio. Net present value (NPV) of debt as a percentage of exports (usually of goods and nonfactor services).

    Net (capital) transfers. Loan disbursements minus debt-service payments (principal repayment and interest) during the same period.

    Nonconsolidated debt. This is debt that is wholly or partly excluded from rescheduling. It has to be repaid on the terms on which it was originally provided, unless creditors agree to defer it.

    OECD Consensus. Formally the “Arrangement on Guidelines for Officially Supported Export Credits,” a framework of rules governing export credits agreed by members of the OECD’s export credit group.

    OECD Export Credit and Credit Guarantees Group, OECD Trade Committee. A forum in which 22 OECD member countries participate in the Arrangement on Guidelines for Officially Supported Export Credits (the Consensus). Turkey and Mexico also attend this Group as observers. Aside from coordinating export credit terms, the OECD Export Credit Group has also served as a forum for the exchange of information on debtor country situations and agencies’ practices; at the meetings of the Group the governmental authorities of the agencies are represented.

    Official creditors. Public sector lenders. Some are multilateral, namely, international financial institutions such as the IMF, the World Bank, and regional development banks. Others are bilateral, namely, agencies of individual governments (including central banks) such as export credit agencies.

    Official development assistance (ODA). Flows of official financing defined by the OECD that meet the following test: (1) its main objective is the promotion of the economic development and welfare of the developing countries and (2) it is concessional in character and contains a grant element of at least 25 percent (using a fixed discount rate of 10 percent). ODA is provided to developing countries and to multilateral institutions by OECD/DAC members and other countries through their official agencies, including state and local governments, or by their executive agencies; ODA is also provided to developing countries by multilateral institutions. Lending by export credit agencies—with the pure purpose of export promotion—is excluded.

    Official development finance (ODF). Total official flows to developing countries excluding officially supported export credits (the latter are regarded as primarily trade-promoting rather than development-oriented). Comprises official development assistance (ODA) and other official development finance flows.

    Official export credit agency. An agency within a creditor country that provides loans, guarantees, or insurance to finance the specific purchase of goods for export. (See officially supported export credits.)

    Officially supported export credits. Loans or credits to finance the export of goods and services for which an official export credit agency (ECA) in the creditor country provides guarantees, insurance, or direct financing. The financing element as opposed to the guarantee/ insurance element—may derive from various sources. It can be extended by an exporter (suppliers’ credit), or through a commercial bank in the form of financial trade-related credit provided either to the supplier (also suppliers’ credit) or to the importer (buyers’ credit). It can also be extended directly by an ECA of the exporting countries, usually in the form of medium-term finance as a supplement to resources of the private sector, and generally for export promotion for capital equipment and large-scale, medium-term projects. Under OECD Consensus rules covering export credits with a duration of two years or more, up to 85 percent of the export contract value can be financed.

    Other official development flows (other ODF). Development-oriented official flows that do not qualify as official development assistance (ODA). Bilateral “other” ODF includes mainly refinancing loans and the capitalization of interest in debt restructuring agreements.

    Paris Club. Informal group of creditor governments that has met on a regular basis in Paris since 1956 to reschedule bilateral debts; the French Treasury provides the Secretariat. Creditors meet with a debtor country in order to reschedule its debts as part of the international support provided to a country that is experiencing debt-servicing difficulties and is pursuing an adjustment program supported by the IMF. The Paris Club does not have a fixed membership and its meetings are open to all official creditors that accept its practices and procedures. The core creditors are mainly OECD member countries, but other creditors attend as relevant for a debtor country. Russia became a member in September 1997.

    Political risk. The risk of borrower country government actions that prevent, or delay, the repayment of export credits. Many export credit agencies also include under political risk such events as war, civil war, revolution, or other disturbances that prevent the exporter from performing under the supply contract or the buyer from making payment. Some also include physical disasters such as cyclones, floods, or earthquakes.

    Post-cutoff date debt. See cutoff date.

    Poverty Reduction and Growth Facility (PRGF). In 1999, the PRGF replaced the ESAF as the IMF’s concessional loan window.

    Poverty Reduction Strategy Papers (PRSPs) are prepared by low-income member countries through a participatory process involving domestic stakeholders as well as external development partners, including the World Bank and the IMF. A PRSP describes a country’s macroeconomic, structural, and social policies and programs over a three-year or longer horizon to promote broad-based growth and reduce poverty, as well as associated external financing needs and major sources of financing. National PRSPs are available on the World Bank and IMF websites by agreement with the member country.

    Premium. In the context of export credits, the amount paid, usually in advance, by insured lenders as the price of the insurance. An important source of income for export credit agencies.

    Previously rescheduled debt. Debt that has been rescheduled on a prior occasion. This type of debt was generally excluded from further rescheduling in both the Paris and the London Clubs until 1983. Since then however, previously rescheduled debt frequently has been rescheduled again for countries facing acute payments difficulties.

    PRGF-HIPC Trust. IMF’s participation in the PRGF and the HIPC Initiative are administered through this Trust.

    Quantitative (or cover) limits. Mechanisms by which export credit agencies restrict the amount of cover offered to a particular country. These can, for example, take the form of limits on the total cover for a country or on the amount of cover offered for individual transactions. The limit set is an important means of limiting exposure to countries considered to be risky.

    Rights Accumulation Program (RAP). An IMF program of assistance established in 1990 whereby a member country with long overdue obligations to the IMF, while still in arrears, may accumulate “rights” toward a future disbursement from the IMF on the basis of a sustained performance under an IMF-monitored adjustment program. Countries incurring arrears to the IMF after end-1989 are not eligible for assistance under this program. Rights accumulation programs adhere to the macroeconomic and structural policy standards associated with programs supported by the EFF and PRGF, and performance is monitored, and rights accrue, quarterly.

    Recoveries. Repayments made to export credit agencies by borrowing countries after agencies have paid out claims to exporters or banks on the loans concerned.

    Refinancing. See debt refinancing.

    Reinsurance. Reinsurance by export credit agencies of amounts originally insured by a private sector insurer or commercial bank (some large official agencies are also providing reinsurance for smaller official agencies). For example, a private insurer might keep the commercial risk of a loan on its own books but seek reinsurance against specific political risks.

    Repayment period. The period during which repayments under the financing are due to be made; this period usually starts after the end of performance under the commercial contract.

    Rescheduling. Debt restructuring in which specified arrears and future debt service (falling due during the consolidation period) are consolidated and form a new loan with terms defined at the time of the rescheduling. Rescheduling debt is one means of providing a debtor with debt relief through a delay and, in the case of concessional rescheduling, a reduction in debt-service obligations. For official bilateral creditors, the main forum for negotiating debt rescheduling is the Paris Club. Rescheduling is typically provided by the international financial community in order to support a debtor country’s economic adjustment program.

    Rescheduling agreement. An agreement between a creditor, or a group of creditors, and a debtor to reschedule debt. The agreement may also include other debt restructuring strategies such as write-offs or swaps.

    Short-term commitments or credits. Commitments that provide for repayment within a short period, usually six months (though some export credit agencies define short-term credits as those with repayment terms of up to one or two years). Usually relating to sales of consumer goods and raw materials, and usually taking the form of policies for whole-turnover/comprehensive coverage. Short-term debt in the context of the Paris Club has a maturity of under and up to one year.

    Special accounts. In the context of the Paris Club, deposits into special accounts were first introduced in 1983 for debtor countries that had a history of running into arrears. After the signing of the Agreed Minute, the debtor makes monthly deposits into an earmarked account at the central bank of one of the creditor countries. The deposit amounts are roughly equal to the moratorium interest that is expected to fall due on the rescheduled debt owed to all Paris Club creditors combined and any other payments falling due during the consolidation period. The debtor then draws on the deposited funds to make payments as soon as the bilateral agreements with the individual Paris Club creditors are signed and as other payments fall due.

    Standard terms. See middle-income countries.

    Stand-By Arrangement (SBA). An IMF lending facility established in 1952 through which a member country can use IMF financing up to a specified amount to overcome balance of payments difficulties of a short-term or cyclical character. Installments are normally phased on a quarterly basis, with their release conditional upon meeting performance criteria and the completion of periodic reviews. Performance criteria generally cover credit policy, government or public sector borrowing requirements, trade and payments restrictions, foreign borrowing, and reserve levels. These criteria allow both the member and the IMF to assess progress in policy implementation and may signal the need for further corrective policies. Stand-By Arrangements typically cover a 12- to 18-month period (although they can extend up to 3 years). Repayments are to be made over 5 years including a grace period of 33/4 years.

    Standstill. An interim agreement between a debtor country and its commercial banking creditors as a result of which principal repayments of medium- and long-term debt are deferred and short-term obligations are rolled over, pending agreement on a debt reorganization. The objective is to give the debtor continuing access to a minimum of trade-related financing while negotiations take place and to prevent some banks from abruptly withdrawing their facilities at the expense of others.

    Stock-of-debt operation. In the context of the Paris Club, an exit rescheduling of the eligible stock of debt (pre-cutoff date, non-ODA debt) for countries that have graduated from flow rescheduling. Stock operations on Cologne terms are given to countries that have reached their completion points under the enhanced HIPC Initiative (see Tables A5.5, A5.6, and A5.7).

    Structural Adjustment Facility (SAF)/Enhanced Structural Adjustment Facility (ESAF). The Structural Adjustment Facility (SAF), established in 1986, and succeeded in 1987 by the Enhanced Structural Adjustment Facility, was until 1999 (when it was replaced by the PRGF) the concessional loan window of the IMF. ESAF was available to low-income member countries facing protracted balance of payments problems and provided resources at an annual interest rate of 0.5 percent, repayable over 10 years, including a grace period of 5½ years.

    Subordination strategy. Policy of Paris Club creditors that loans extended after the cutoff date GLOSSARY OF TERMS are not subject to rescheduling; therefore, precutoff date loans are effectively subordinated to new lending.

    Suppliers’ credit. A financing arrangement under which an exporter extends credit to the buyer in the importing country.

    Terms-of-reference rescheduling. Paris Club rescheduling involving only a small number of creditors. Typically this does not require a rescheduling meeting between the debtor country and its creditors, with the agreement being reached through an exchange of letters.

    Tied-aid loans. Bilateral loans that are linked to purchases from the country providing the loans.

    Toronto terms. See concessional rescheduling.

    Transfer risk. The risk that a borrower will not be able to convert local currency into foreign exchange and so will be unable to make debt-service payments in foreign currency. The risk would usually arise from exchange restrictions imposed by the government in the borrower’s country. This is a particular kind of political risk.

    Uncovered claims. See claims payments.

    Upper-middle-income countries. In the context of the Paris Club, countries not considered lower middle-income or low-income. These countries receive nonconcessional rescheduling terms—originally with flat repayment schedules, but in the 1990s increasingly with graduated payments schedules with usually up to 15 years’ maturity and 8 years’ grace period for commercial credits. ODA credits are rescheduled over 10 years, including 5–6 years’ grace. In the context of the World Bank classification, upper middle-income countries are those with a per capita GNI in 2001 of



    Figure A5.1.Evolution of Paris Club Low-Income Rescheduling Profiles1

    (Percent of amounts consolidated)

    Sources: Paris Club Secretariat; and IMF staff estimates.

    1Assuming a market interest rate of 8 percent. The payments profiles reflect the actual distribution of the debt reduction option (DR), debt service reduction option (DSR), the capitalization of moratorium interest option (CMI), or the long maturities option (LM). For an explanation of these terms, see the Glossary.

    2Assuming equal principal repayments over 10 years including 5 years of grace.

    3Equal distribution among the options (DR, DSR, and LM).

    4Distribution (in percent) of DR 40; DSR 45; CMI 10; LM 5.

    580 percent reduction in NPV terms provided in the context of the original HIPC Initiative. Distribution (in percent) of DR 50; DSR 50.

    667 percent reduction in NPV terms. Distribution among options (in percent): DR 45; DSR 45; CMI 10. The LM option is not included, given that any creditor choosing this option undertakes best efforts to change to a concessional option at a later date when feasible.

    790 percent reduction in NPV terms provided in the context of the enhanced HIPC Initiative. DR option only.

    Table A5.1.Evolution of Paris Club Rescheduling Terms
    Low-Income Countries2
    Middle-Income Countries 1Lower-Middle-income Countries (Houston terms)1Naples terms options4
    DSRCologne terms options5,6
    Toronto terms optionsLondon terms options3Maturing flowsLyon terms options5
    ImplementedSince Sept. 1990Oct. 1988–June 1991Dec. 1991–Dec. 1994Since January 1995Dec. 1996–Oct. 1999Since Nov. 1999
    Grace (in years)5–61Up to 8188146516763820688206
    Maturity (in years)911511414252323232523333333402340404023
    Repayment scheduleFlat/graduatedFlat/graduated——Flat————Graduated————Graduated———Graduated—Graduated
    Interest rate8MMMR9MMR10R10MMR11R11R11MMR12R12MM
    Reduction in net present value (in percent)3320–301350505067676767808080906
    Memorandum items
    ODA credits
    Grace (in years)5–6Up to 101414141212121616161616201616162016
    Maturity (in years)10202525253030302540404040404040404040
    Source: Paris Club.
    Table A5.2.Paris Club Reschedulings of Official Bilateral Debt: Amounts Consolidated in Successive Reschedulings, 1976–2002(Millions of U.S. dollars)
    Bosnia and Herzegovina68326831
    El Salvador1351351
    Gambia, The17171
    Kyrgyz Republic1011011
    São Tomé and Principe28281
    Dominican Republic2908501,1402
    Macedonia, FYR288463342
    Trinidad and Tobago2091103192
    Yemen, Republic of1131,44642061,9793
    Congo, Republic of7561,0521,1751,7534,7414
    Equatorial Guinea381032511314
    Burkina Faso713664642402, 72155
    Costa Rica136166182139586815
    Yugoslavia, Fed. Rep. of5008129011,2914,30937,8135
    Central African Republic72131428432231867
    Mozambique283361719440664101,9312, 82,34476,7427
    Sierra Leone39372536164423921226448
    Côto d’Ivoire2302133705679348061,8491,3321,8228,1239
    Congo. Dem. Rep. of270170401,0405001,4974084296711,5308,16314,71811
    Sources: Agreed Minutes of debt reschedulings; Paris Club Secretariat; and IMF staff estimates.
    Table A5.3.Rescheduling on Nonconcessional Terms: Amounts Due and Consolidated Under Flow Rescheduling, 2001–021(Millions of U.S. dollars, unless otherwise indicated)
    Arrears2Current Maturities3Total
    Debt service due1,19911,78612,984
    Pre-cutoff date debt1,19710,83312,029
    Not previously rescheduled1,1209,56410,683
    Previously rescheduled771,2691,346
    Of which
    Post-cutoff date debt1843844
    Short-term debt1110111
    Debt service treated1,0847,9769,060
    Consolidated amounts1,0847,9769,060
    Not previously rescheduled1,0576,9518,008
    Previously rescheduled4271,0251,052
    Of which
    Deferred for the first time
    Post-cutoff date debt
    Short-term debt
    Moratorium interest
    Debt service payable2094,3234,532
    Pre-cutoff date debt not treated51132,8572,970
    Not previously rescheduled632,6132,676
    Previously rescheduled50244294
    Of which
    Post-cutoff date debt1843844
    Short-term debt1110111
    Moratorium interest94513607
    Debt service payable in percent of debt service due173735
    Sources: Paris Club Secretariat; and IMF staff estimates.
    Table A5.4.Rescheduling on Concessional Terms: Amounts Due and Consolidated Under Flow Rescheduling, 2001–021(Millions of U.S. dollars, unless otherwise indicated)
    Arrears2Current Maturities3Total
    Debt service due10,9535,71516,668
    Pre-cutoff date debt9,7934,50414,296
    Not previously rescheduled1,3527762,128
    Previously rescheduled8,4413,72712,168
    Of which
    Post-cutoff date debt1,0441,1972,241
    Short-term debt11615131
    Debt service treated12,4034,49416,896
    Consolidated amounts9,7474,25314,000
    Not previously rescheduled1,3166781,994
    Previously rescheduled48,4313,57512,006
    Of which
    Deferred for the first time2,6562402,896
    Post-cutoff date debt94455999
    Short-term debt109109
    Moratorium interest1,832641,896
    Debt service payable5611,5692,131
    Pre-cutoff date debt not treated545251296
    Not previously rescheduled3698134
    Previously rescheduled10152162
    Of which
    Post-cutoff date debt1011,1411,242
    Short-term debt71521
    Moratorium interest179284463
    Debt service payable (in percent of debt service due)52713
    Sources: Paris Club Secretariat; and IMF staff estimates.
    Table A5.5.Amounts Restructured Under Stock-of-Debt Operations for Low-Income Countries on Naples Terms, 2001–021(Millions of U.S. dollars)
    Stocks TreatedStocks Not TreatedTotal Stocks
    Pre-cutoff date debt4201,3881,808
    Not previously rescheduled4113414
    Previously rescheduled91,3851,394
    Toronto terms
    London terms
    Naples terms91,3851,394
    Post-cutoff date debt396396
    Short-term debt44
    Sources: Paris Club Secretariat; and IMF staff estimates.
    Table A5.6.Amounts Restructured Under Stock-of-Debt Operations for Middle-Income Countries, 2001–021(Millions of U.S. dollars)
    Stocks TreatedStocks Not TreatedTotal Stocks
    Pre-cutoff date debt16,75316,753
    Not previously rescheduled10,80910,809
    Previously rescheduled5,9445,944
    Toronto terms
    London terms
    Naples terms
    Lyon terms
    Post-cutoff date debt2,0962,096
    Short-term debt8484
    Sources: Paris Club Secretariat; and IMF staff estimates.
    Table A5.7.Amounts Restructured Under Stock-of-Debt Operations for Low-Income Countries on Cologne Terms, 2001–021(Millions of U.S. dollars)
    Stocks TreatedStocks Not TreatedTotal Stocks
    Pre-cutoff date debt4,5225025,024
    Not previously rescheduled460145605
    Previously rescheduled4,0623574,419
    Toronto terms780780
    London terms779779
    Naples terms1,2361,236
    Lyon terms1,2391,239
    Post-cutoff date debt1771,1291,306
    Short-term debt22
    Sources: Paris Club Secretariat; and IMF staff estimates.
    Table A5.8.Reschedulings and Deferrals of Official Bilateral Debt, 1976–2002
    Debtor CountriesNumber of Reschedulings1Date of Agreement (M/D/Y)Amount Consolidated2 (Millions of U.S. dollars)Consolidation Period3 (Months)Terms4
    Grace (Years)Maturity (Years)
    AlbaniaIITOR07/22/9875Naples terms5
    BeninI06/22/8919313Toronto terms
    BeninII12/18/9115219London terms
    BeninIII06/21/932529London terms
    BeninIV10/25/96209StockNaples terms
    BeninV10/24/00512Cologne terms7
    BeninV Amended 107/02/0136Cologne terms7
    BeninV Amended 203/05/0246Cologne terms7
    BeninV Amended 309/18/02514Cologne terms7
    BoliviaIII03/15/9027624Toronto terms
    BoliviaIV01/24/926529London terms
    BoliviaV03/24/9548236Naples terms
    BoliviaVI12/14/95881StockNaples terms
    BoliviaVII10/30/98561StockLyon terms
    BoliviaVIII07/10/01685StockCologne terms
    Bosnia and HerzegovinaI10/28/9867410Naples terms
    Bosnia and HerzegovinaI Amended07/28/00912Naples terms
    Burkina FasoI03/15/917115Toronto terms
    Burkina FasoII05/07/933633London terms
    Burkina FasoIII06/20/9664StockNaples terms
    Burkina FasoIV10/24/00212Cologne terms7
    Burkina FasoIV Amended 107/02/0116Cologne terms7
    Burkina FasoIV Amended 203/05/0226Cologne terms7
    Burkina FasoV06/20/0238StockCologne terms
    Burkina FasoV Amended09/09/022StockCompletion point top-up
    CambodiaI01/26/9524930Naples terms
    CameroonIII03/25/941,25918London terms
    CameroonIV11/16/951,12912Naples terms5
    CameroonV10/24/971,35035Naples terms5
    CameroonVI01/24/011,30037Cologne terms
    Central African RepublicI06/12/8172124.08.5
    Central African RepublicII07/08/8313125.09.5
    Central African RepublicIII11/22/8514184.89.3
    Central African RepublicIV12/14/882818Toronto terms
    Central African RepublicV06/15/90412Toronto terms
    Central African RepublicVI04/12/943212London terms
    Central African RepublicVII09/25/982334Naples terms
    ChadITOR10/24/892415Toronto terms
    ChadIITOR02/28/952412Naples terms
    ChadIIITOR06/04/961232Naples terms
    ChadIVTOR06/12/011523Cologne terms
    Congo, Republic ofI07/18/86756203.79.1
    Congo, Republic ofII09/13/901,052215.814.3
    Congo, Republic ofIII06/30/941,175118.114.6
    Congo, Republic ofIV07/16/961,75836Naples terms
    Congo, Democratic Republic ofI06/16/76270181.07.5
    Congo, Democratic Republic ofII07/07/77170123.08.5
    Congo, Democratic Republic ofIII12/01/774063.09.0
    Congo, Democratic Republic ofIV12/11/791,040183.59.0
    Congo, Democratic Republic ofV07/09/81500124.09.5
    Congo, Democratic Republic ofVI12/20/831,497125.010.5
    Congo, Democratic Republic ofVII09/18/85408154.99.4
    Congo, Democratic Republic ofVIII05/15/86429124.09.5
    Congo, Democratic Republic ofIX05/18/87671136.014.5
    Congo, Democratic Republic ofX06/23/891,53013Toronto terms
    Congo, Democratic Republic ofXI09/13/028,16336Naples terms
    Costa RicaI01/11/83136183.88.3
    Costa RicaII04/22/85166154.99.4
    Costa RicaIII05/26/89182144.99.4
    Costa RicaIV07/16/9113995.09.5
    Costa RicaV06/22/93582.06.5
    Côte d’IvoireI05/04/84230134.08.5
    Côte d’IvoireII06/25/85213124.08.5
    Côte d’IvoireIII05/27/86370364.18.6
    Côte d’IvoireIV12/17/87567165.89.3
    Côte d’IvoireV12/18/89934167.813.3
    Côte d’IvoireVI11/20/91806128.014.5
    Côte d’IvoireVII03/22/941,84937London terms
    Côte d’IvoireVIII04/24/981,33236Lyon terms
    Côte d’IvoireIX04/10/021,82233Lyon terms
    Dominican RepublicI05/21/85290154.99.4
    Dominican RepublicII11/22/91850187.814.3
    El SalvadorI09/17/90135138.014.5
    Equatorial GuineaI07/22/8538184.59.0
    Equatorial GuineaII03/03/8910Toronto terms
    Equatorial GuineaIII04/02/923212London terms
    Equatorial GuineaIV12/15/945121London terms
    EthiopiaI12/16/9244135London terms
    EthiopiaII01/24/9718434Naples terms
    EthiopiaIII04/05/0144637Naples terms
    EthiopiaIII Amended06/18/029529Cologne terms7
    Gambia, TheI09/19/8617125.09.5
    GhanaIII05/16/0216410Cologne terms
    GuineaII04/12/8912312Toronto terms
    GuineaIII11/18/9220312London terms
    GuineaIV01/25/9515612Naples terms5
    GuineaV02/26/9712336Naples terms5
    GuineaVI05/15/0115140Cologne terms
    Guinea-BissauII10/26/892115Toronto terms
    Guinea-BissauIII02/23/9519536Naples terms
    Guinea-BissauIV01/26/0113937Cologne terms
    GuyanaII09/12/9012335Toronto terms
    GuyanaIII05/06/933917London terms
    GuyanaIV05/23/96793StockNaples terms
    GuyanaV06/25/99240StockLyon terms
    HaitiI05/30/9511713Naples terms
    HondurasII10/26/9218011London terms
    HondurasIII03/01/9611213Naples terms5
    HondurasIV04/13/9941136Naples terms
    Kyrgyz RepublicI03/08/02101365.020.0
    Macedonia, FYRI07/17/95288124.09.8
    Macedonia, FYRIITOR09/01/0046121.05.5
    MadagascarVI10/28/8825421Toronto terms
    MadagascarVII07/10/9013913Toronto terms
    MadagascarVIII03/26/971,24735Naples terms
    MadagascarVIII Amended 101/13/002312Naples terms
    MadagascarVIII Amended 208/18/003461.58.0
    MadagascarIX03/07/0125439Cologne terms
    MalawiIV01/25/016637Cologne terms
    MaliI10/27/886316Toronto terms
    MaliII11/22/894426Toronto terms
    MaliIII10/29/922018London terms
    MaliIV05/20/9633StockNaples terms
    MaliV10/25/003.910Cologne terms7
    MaliV Amended 107/02/010.56Cologne terms7
    MaliV Amended 206/25/020.712Cologne terms7
    MauritaniaIV06/19/895212Toronto terms
    MauritaniaV01/26/9321824London terms
    MauritaniaVI06/28/956636Naples terms
    MauritaniaVII03/16/009836Cologne terms
    MauritaniaVIII07/08/02385StockCologne terms
    MozambiqueIII06/14/9071930Toronto terms
    MozambiqueIV03/23/9344024London terms
    MozambiqueV11/20/9666432Lyon terms12
    MozambiqueVI07/09/991,860StockLyon terms13
    MozambiqueVI Amended03/15/0071120.24.7
    MozambiqueVII11/20/012,344StockCologne terms
    NicaraguaI12/17/9172215London terms
    NicaraguaII03/22/9578327Naples terms
    NicaraguaIII04/22/9845236Naples terms
    NicaraguaIII Amended03/16/99448271.66.1
    NicaraguaIV12/13/02580366.0Cologne terms23.0
    NigerVI12/16/884812Toronto terms
    NigerVII09/18/9011628Toronto terms
    NigerVIII03/04/9416015London terms
    NigerIX12/18/9612831Naples terms
    NigerX01/25/0111537Cologne terms
    RussiaV08/01/998,040181.420.06, 16
    RwandaI07/28/986434Naples terms
    RwandaII03/07/0211731Cologne terms
    Sao Tome and PrincipeI05/16/002837Naples terms
    SenegalVII01/23/8914314Toronto terms
    SenegalVIII02/12/9010712Toronto terms
    SenegalIX06/21/9111412Toronto terms
    SenegalX03/03/9423715London terms
    SenegalXI04/20/9516929Naples terms
    SenegalXII06/17/98590StockNaples terms
    SenegalXIII10/24/002118Cologne terms7
    SenegalXIII Amended06/25/021196.023.0
    Sierra LeoneI09/15/7739241.58.5
    Sierra LeoneII02/08/8037164.29.7
    Sierra LeoneIII02/08/8425125.010.0
    Sierra LeoneIV11/19/8686184.89.2
    Sierra LeoneV11/20/9216430London terms
    Sierra LeoneVI07/20/944217London terms
    Sierra LeoneVII03/28/963924Naples terms
    Sierra LeoneVIII10/16/0117736Naples terms
    Sierra LeoneVIII Amended03/10/023536Cologne terms7
    TanzaniaII12/13/883776Toronto terms
    TanzaniaIII03/16/9019912Toronto terms
    TanzaniaIV01/21/9269130London terms
    TanzaniaV01/21/971,60836Naples terms
    TanzaniaVI04/13/0070921Cologne terms
    TanzaniaVII01/17/021,245StockCologne terms
    TogoVII06/20/897614Toronto terms
    TogoVIII07/09/908824Toronto terms
    TogoIX06/19/92529London terms
    TogoX02/23/9523733Naples terms
    Trinidad and TobagoI01/25/89209144.99.4
    Trinidad and TobagoII04/27/90110135.09.5
    UgandaIV01/26/898918Toronto terms
    UgandaV06/17/923924London terms
    UgandaVI02/20/95110StockNaples terms
    UgandaVII04/24/98148StockLyon terms
    UgandaVIII09/12/00145StockCologne terms
    VietnamI12/14/93791London terms
    Yemen, Republic ofI09/24/9611310Naples terms
    Yemen, Republic ofII11/20/971,44636Naples terms
    Yemen, Republic ofIII06/14/01420StockNaples terms
    Yugoslavia, Federal Rep. ofI05/22/84500124.06.5
    Yugoslavia, Federal Rep. ofII05/24/85812163.88.3
    Yugoslavia, Federal Rep. ofIII05/13/86901123.99.4
    Yugoslavia, Federal Rep. ofIV07/13/881,291155.99.4
    Yugoslavia, Federal Rep. of 18V12/28/014,309Stock6.022.0
    ZambiaIV07/12/9096318Toronto terms
    ZambiaV07/23/9291733London terms
    ZambiaVI02/28/9656636Naples terms
    ZambiaVII04/16/991,06036Naples terms
    ZambiaVIII09/13/0224927Cologne terms7
    Sources: Paris Club and IMF staff estimates.

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      Andrews, David, AnthonyR.Boote, SayedS. Rizavi, and SukhwinderSingh,1999, Debt Relief for Low- Income Countries: The Enhanced HIPC Initiative, IMF Pamphlet Series No. 51 (Washington: International Monetary Fund).

      Devarajan, Shantayanan, Margaret J.Miller, and Eric V.Swanson,2002, “Goals for Development: History, Prospects and Costs,”Policy Research Working Paper No. 2819 (Washington: World Bank).

      George, AbrahamM., and Ian H.Giddy,eds., 1988, International Finance Handbook,Vol. 2, Part 7 (New York: Wiley).

      Hufbauer, GaryClyde, and BenGoodrich,2002, “Support the EX-IM Bank: It Has Work to Do!”International Economic Briefs, No. PB02–4 (Washington: Institute for International Economics).

      International Monetary Fund, 2002, “Assessing Sustainability,”May (Washington), available via the Internet at

      International Monetary Fund, 2003, “Trade Finance in Financial Crises: Assessment of Key Issues,”December (Washington), available via the Internet at

      International Monetary Fund, and World Bank, 2001, “Debt Relief for Poverty Reduction: The Role of the Enhanced HIPC Initiative” (Washington). Also available via the Internet at

      International Monetary Fund, 2002a, “Heavily Indebted Poor Countries (HIPC) Initiative: Status of Implementation,”April (Washington), available via the Internet at

      International Monetary Fund, 2002b, “The Enhanced HIPC Initiative and the Achievement of Long-Term External Debt Sustainability,”April (Washington), available via the Internet at 2002/lteds/041502.htm.

      International Monetary Fund, 2002c, “Heavily Indebted poor Countries (HIPC) Initiative: Status of Implementation,”September (Washington), available via the Internet at

      International Monetary Fund, 2003a, “Heavily Indebted Poor Countries (HIPC) Initiative—Statistical Update,”March (Washington), available via the Internet at update/031003.htm.

      International Monetary Fund, 2003b, “Heavily Indebted Poor Countries (HIPC) Initiative—Status of Implementation,”September (Washington), available via the Internet at

      Kuhn, MichaelG., BalazsHorvath, and ChristopherJ. Jarvis,1995, Officially Supported Export Credits: Recent Developments and Prospects, World Economic and Financial Surveys (Washington: International Monetary Fund).

      Loko, Boileau, MontfortP. Mlachila, RajNallari, and KadimaD. Kalonji,2003, “The Impact of External Indebtedness on Poverty in Low-Income Countries,”IMF Working Paper No. 03/61 (Washington: International Monetary Fund).

      Organization for Economic Cooperation and Development, 2001, Development Cooperation Report 2001 (Paris), available via the Internet at,2340,en_2649 _201185_2068071_1_1_1_1,00.html.

      Organization for Economic Cooperation and Development, 2003, OECD DAC Countries Begin Recovery in Development Aid: 5% Increase in 2002 (Paris), available via the Internet at,2340,en_2649_34447_2507754_1_1_1_1,00.html.

      Ross, DorisC., and RichardT. Harmsen,2001, Official Financing for Developing Countries, World Economic and Financial Surveys (Washington: International Monetary Fund).

      Stephens, Malcolm,1998, “Export Credit Agencies, Trade Finance and South East Asia,”IMF Working Paper No. 98/175 (Washington: International Monetary Fund).

      Stephens, Malcolm,1999, The Changing Role of Export Credit Agencies (Washington: International Monetary Fund).

      Stephens, Malcolm, and DianaSmallridge,2002, “A Study on the Activities of IFIs in the Area of Export Credit Insurance and Export Finance,”INTAL-ITD-STA Occasional Paper Series, No. 16 (Buenos Aires: Inter-American Development Bank, Integration and Regional Programs Departments).

      United Nations, 2001, “Report of the High Level Panel on Financing for Development,”Document A/55/1000 (New York).

      World Bank, 2002, World Development Report 2000/2001 (New York: Oxford University Press).

      World Bank, 2003, Global Development Finance: Striving for Stability in Development Finance, 2003 (Washington).

    ODF consists of ODA and other official flows (OOF) provided by OECD-DAC members and multilateral institutions. ODA reflects concessional funds provided to developing countries, while OOF consists of nonconcessional funds provided to developing countries, as well as official funds provided to some transition and middle-income countries. This review is largely based on developments to end-2001 using creditor-based data from the OECD-DAC.

    The 1999 figures of OOF reflected substantial funds provided by Japan to the Asian Development Fund.

    Data for 2002 are based on preliminary figures released by the DAC. For details, see Organization for Economic Cooperation and Development (2003).

    See four new sets of guidelines adopted by OECD-DAC (Organization for Economic Cooperation and Development, 2001).

    As highlighted in Ross and Harmsen (2001), recent work on aid effectiveness has shown that strong national ownership of reform programs contributes significantly to the effectiveness of external assistance.

    In this regard, OECD-DAC donors made a commitment in April 2001 to untie aid provided to the least developed countries.

    The Millennium Development Goals include commitments to combat extreme poverty and hunger, achieve universal primary education, promote gender equality, reduce child mortality, improve maternal health, combat diseases, ensure environmental sustainability, and maintain a global partnership for development.

    See Devarajan, Miller, and Swanson (2002) and United Nations (2001). The latter report (also known as the “Zedillo report”) estimated that additional financing of $50 billion would be required to meet the MDGs.

    See Organization for Economic Cooperation and Development (2001). In examining some of the financing implications of meeting the MDGs, the OECD calculates that a rise in the ODA/GNI ratio from the present level of 0.22 percent to 0.32 percent by 2010 would—assuming growth of 2.5 percent in the national income of DAC members—result in a doubling of ODA from its 2000 levels.

    The G-8 also adopted the Africa Action Plan as a framework for action in support of the New Partnership for Africa’s Development (NEPAD). The G-8 donors indicated that—assuming strong African policy commitments and given recent assistance trends—half or more of the increase in development assistance could be directed to African nations that govern justly, invest in their own people, and promote economic freedom.

    For a comprehensive description of the HIPC Initiative, see Andrews and others (1999) and International Monetary Fund and World Bank (2001).

    See International Monetary Fund and World Bank (2002a, 2002c, 2003a, and 2003b).

    Does not include estimated costs for the Lao People’s Democratic Republic, Liberia, Somalia, and Sudan.

    For instance, according to some cross-country estimates a debt-to-GDP ratio of 40 percent is a useful benchmark, above which a country’s conditional probability of a debt crisis is around 15–20 percent, while below 40 percent the probability of a debt crisis is estimated at 2–5 percent.

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