Heavily Indebted Poor Countries (HIPC) Initiative - Statistical Update
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Heavily Indebted Poor Countries (HIPC) Initiative - Statistical Update

Abstract

Heavily Indebted Poor Countries (HIPC) Initiative - Statistical Update

I. Guide to the Tables

1. This update provides recent data on the status of implementation of the Heavily Indebted Poor Countries (HIPC) Initiative. In September 2002, the Bank and Fund Boards agreed that staffs would prepare six-monthly statistical updates on implementation in addition to annual reviews. Below are some highlights drawn from the accompanying tables.

A. Progress in Implementation (Tables 1, 2)

Table 1.

HIPC Initiative: Progress in Implementation Status as of January 2003

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Sources: Staff estimates

Refers to the Enhanced HIPC Initiative.

Based on staffs’ judgment of progress towards the decision/completion point.

Countries that are considered retroactive - not subject to the requirement to have a PRSP under implementation for at least one year under the enhanced framework.

Completion point for Mali was approved by the World Bank and IMF’s Executive Boards on March 6, 2003.

Countries reported in the Fall 2002 Progress Report as having encountered difficulties in the implementation of their macroeconomic programs.

Countries in non accrual status with World Bank disbursements suspended.

These countries are expected to achieve debt sustainability after receiving debt relief provided under traditional mechanisms.

Table 2.

HIPC Initiative: Committed Debt Relief and Outlook 1/ Status as of March 7, 2003

(In millions of U.S. dollars)

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Source: HIPC Initiative country documents; World Bank and IMF staff estimates.

Commited Debt Relief under the assumption of full participation of the creditors.

As of the completion point year for the Original HIPC Initiative and as of the decision point year for the Enhanced HIPC Initiative.

The assistance under the enhanced HIPC Initiative includes the topping up with the NPV calculated in terms of the completion point year.

The figures for the Enhanced HIPC Initiative correspond to the Completion Point Document approved by the World Bank and IMF’s Executive Boards on March 6, 2003.

It is suggested that debt relief under the original framework be overtaken by HIPC relief under the enhanced framework.

Preliminary document issued.

Countries that have reached their decision points under the enhanced HIPC framework through end-February 2003 and Côte d’Ivoire, which had reached the decision point under the original framework earlier.

Pre Decision Point Countries

2. Many of the 12 countries that have not yet reached the decision point are affected by conflict and in some instances have substantial arrears outstanding to various creditors. In

Côte d’Ivoire, sudden domestic conflict prevented the country from reaching its decision point as anticipated last fall, and the preparation of a preliminary document was delayed in the case of the Central African Republic for the same reason. The Democratic Republic of Congo, however, has made significant progress and is expected to reach its decision point soon.

Countries in the Interim stage

3. The number of countries that have reached their completion points has increased by one (Mali)1 since September 2002 and Benin is expected to reach its completion point within a few weeks. Most of the countries in the interim period are still within the timeframe envisaged for this stage when the Enhanced HIPC Initiative was launched.2 Nevertheless, some countries have experienced delays in reaching their completion points relative to the dates foreseen at the time of their respective decision points. The reasons for the delays are:

  • the process of preparing high quality PRSPs reflecting broad consultation has taken longer than anticipated. Relative to earlier expectations, delays in excess of six months were encountered in at least 13 of the 19 interim period countries3, of which seven have yet to finalize their PRSPs;4

  • PRGF programs have experienced interruptions, usually because of fiscal slippages. There are currently two countries that have neither had new programs or program reviews approved within the last six months nor have much prospect for coming back on track with PRGF programs within the next six months;5 and

  • implementation of other completion point triggers has generally been slower than envisaged.

B. Summary of Costs (Tables 3, 4)6

4. There is little change in the cost of debt relief under the Initiative to 34 countries covered under the September 2002 costing exercise, with the estimated amount now standing at US$37.2 billion in 2001 NPV terms.7 Converting this amount to bring it into 2002 NPV terms8, the estimate would amount to US$39.2 billion (Table 3). The costs remain broadly equally divided between bilateral and multilateral creditors (Table 4). These estimates do not include the possible costs of topping up for countries currently in the interim period.9 The framework has so far committed an estimated US$27.3 billion of HIPC relief in 2002 NPV terms to the 26 decision point countries (Table 4).

Table 3.

HIPC Initiative: Changes in the Estimates of Potential Costs by Creditor Group (34 countries)

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Source: HIPC Initiative country documents; World Bank and IMF staff estimates.

All HIPCs, excluding potentially sustainable cases (Angola, Kenya, Vietnam, and Yemen) and Liberia, Lao P.D.R., Somalia, and Sudan.

Reflects: i) updated DSAs for Democratic Republic of Congo and Mali; and ii) updated assumptions on the discount rate used in the NPV calculation, which has been revised from 6 to 5.45 percent.

Table 4.

HIPC Initiative: Breakdown of Estimated Potential Costs by Main Creditors and by Country Groups

(In billions of U.S. dollars, in 2002 NPV terms) 1/

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Source: Country authorities; World Bank and IMF staff estimates.

All HIPCs, excluding potentially sustainable cases (Angola, Kenya, Vietnam, and Yemen) and Liberia, Lao P.D.R., Somalia, and Sudan.

Benin, Bolivia, Burkina Faso, Guyana, Mali, Mozambique, Senegal, and Uganda. Côte d’Ivoire is a retroactive case but has not reached its enhanced decision point.

Cameroon, Chad, Ethiopia, The Gambia, Ghana, Guinea, Guinea-Bissau, Honduras, Madagascar, Malawi, Mauritania, Nicaragua, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Tanzania, and Zambia.

Burundi, Central African Republic, Comoros, Democratic Republic of Congo, Republic of Congo, Côte d’Ivoire, Myanmar, and Togo.

C. Multilateral Creditors: Costs, Commitments and Delivery (Tables 5, 6A, 6B, 7A, 7B, 8)

Table 6B.

HIPC Initiative: Estimated Delivery of World Bank Assistance, 2000-0’

(In millions of U.S. dollars)

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Source: HIPC country documents; and World Bank staff estimates.

Figures correspond to the respective fiscal year period.

These numbers differ from those in the 2nd completion point document, as the document did not reflect new borrowing that took place between the original decision point and the enhanced decision point.

These numbers differ from those in the 2nd completion point document, as a new schedule of delivery was approved at end-January 2003.

Weighted average.

Table 7B.

HIPC Initiative: Estimated Delivery of IMF Assistance, 1998-2009 1/

(In millions of U.S. dollars)

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Source: HIPC country documents and IMF staff estimates.

Under the Original and Enhanced HIPC Initiative.

Obligations to the Fund as presented in the members’ respective decision point documents under the Enhanced HIPC Initiative, with revisions where necessary.

Fiscal year data.

Using SDR/U.S. dollar exchange rate at the completion point (for original HIPC assistance) or at the decision point (for enhanced HIPC assistance). Includes projected investment income.

Weighted average.

5. Multilateral creditors are providing, or are committed to provide, HIPC debt relief amounting to US$18.7 billion (2002 NPV terms)—over 99 percent of the total debt relief required from all 30 multilateral creditors (Table 5).10 The large multilateral creditors, including IDA, the IMF, AfDB, IaDB, and CABEI are providing relief to most countries in the interim period. In October 2002, the East African Development Bank agreed to participate in the HIPC Initiative and the Arab Monetary Fund reconfirmed its participation in early 2003. This leaves seven small multilateral creditors that have not yet committed to the HIPC Initiative, due mainly to financial constraints (Table 5).

Table 5.

HIPC Initiative: Estimates of Costs for Multilateral Creditors and Status of Commitment

(In millions of U.S. dollars, in 2002 NPV terms)

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Source: HIPC documents; HIPC authorities; and World Bank staff estimates.

Some of these creditors are providing relief on a case-by-case basis, and have yet to agree to participation in the entire HIPC Initiative. Moreover, for a few of these creditors, significant delays in developing the modalities and the actual delivery of debt relief have been experienced.

The EADB Board has recently approved the Bank’s participation in the HIPC Initiative.

6. The total costs to the World Bank Group for the 26 countries that have reached the decision point are estimated at US$6.9 billion in 2002 NPV terms (Table 4),11 equivalent to US$11.3 billion in nominal terms. The total delivered amount of HIPC relief for the 26 countries stands at US$2.4 billion in nominal terms (Table 6A).

Table 6A.

HIPC Initiative: Status of Delivery of Assistance by the World Bank

(In millions of U.S. dollars, as of end-January 2003)

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Source: HIPC country documents; and World Bank staff estimates.

Assistance is considered as provided: i) at the effective date of the purchase of IDA credits, provision of IDA grants or prepayment of IBRD loan and ii) at the due date in the case of debt service reduction.

These figures are from the respective Completion Point Documents and include the reduction in interest payments associated with the cancellation loans and the provision of grants instead loans.

Assistance to be provided through the reduction of the debt service to IDA.

Assistance to be provided through the purchase by the HIPC Trust Fund of selected IDA credits.

Assistance to be provided through the purchase by the HIPC Trust Fund of selected IDA credits and the reduction of the debt service to IDA.

Assistance to be provided through the provision of IDA grants; the purchase by the HIPC Trust Fund of selected IDA credits and the reduction of the

debt service to IDA.

Unless otherwise indicated, assistance to be provided through the reduction of the debt service to IDA.

Since the Original HIPC Initiative covered a significant share of debt service to IDA until June 2002, Bolivia started to benefit from significant amounts of assistance under the Enhanced HIPC Initiative only in July 2002.

Includes topping up assistance

Assistance to be provided through: i) IDA grants which would be used to cover 56 percent of IBRD debt service during the interim period; ii) an IDA credit to prepay all IBRD outstanding debt at the completion point; and iii) a reduction of IDA debt service falling due after the completion point.

Assistance to be provided through IDA grants and an IDA credit to prepay all IBRD outstanding debt at the completion point.

7. The total cost to the IMF is estimated at US$2.9 billion (2002 NPV terms), of which US$2.2 billion is for the 26 decision point countries (Table 4 and Table 7A)12. The IMF has committed to provide the latter relief in full, which amounts to SDR 1.6 billion in decision point NPV terms. Of this, SDR 1.0 billion in HIPC relief has already been delivered in the form of grants (Table 7A).13

Table 7A.

HIPC Initiative: Status of Commitments by the IMF

(In millions of SDRs, as of end-January 2003)

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Source: www.imf.org/external/fin.htm

Includes interest on amounts committed.

Equivalent to the committed amount of US $22.5 million at decision point exchange rates (3/17/98).

Includes commitment of additional enhanced HIPC assistance of SDR 10.93 million subject to receipt of satisfactory financing assurances from other creditors.

8. A technical meeting was held by donors in October 2002 to review the financing needs of the HIPC Trust Fund. By end-December 2002, pledges from donors had been received for an additional US$850 million against an estimated funding gap of the same amount. This raised pledges by donors to the HIPC Trust Fund to about US$3.4 billion; contributions against these pledges reached US$2.5 billion by end-January 2003 (Table 8).

Table 8.

Status of Bilateral Donor Pledges to the HIPC Trust Fund Status as of end-January 2003

(Nominal Amounts in millions of U.S. dollars)

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Source: IDA Note: Many donors have also provided debt relief through other initiatives and mechanisms including: the Debt Reduction Facili Countries for IDA-only (providing financing for commercial debt reduction efforts), specific country-held multilateral debt relief facilities and the Central American Emergency Trust Fund with bilateral donor funding (In $ million) of: Spain-$30; Norway-$15.3; Netherlands-$12.8; Switzerland-$18.3; Italy-$12; United Kingdom - $16.3; Austria - $2.7; Canada - $5.4; Germany-$13.2; Sweden-$23.4; United States-$25; and Denmark-$10.9 (through a bilateral trust fund administered by IDB). These resources are not included herewith as the debt relief under HIPC is additional to these efforts.

No contribution pledges were done in September 2002.

In addition, the Netherlands provided US$20 million for debt relief provided by the IMF to Zambia over and above the debt relief called for under the HIPC Debt Initiative. This amount is not included in the contribution amount presented above.

In addition, the United Kingdom contributed SDR31.5 million to the HIPC Trust Fund for the IMF for debt relief to Uganda.

4/ Of this amount, $2,426 million has been paid-in; the balance of $149 million is outstanding from the following: Denmark-$ 3 m, Germany-$8 m; Japan-$35m; Spain-$20m; United Kingdom-$83 million.

From Chairman’s Summary of HIPC Technical Meeting of Oct. 24, 2002. Greece subsequently provided and paid a contribution of EUR2 million.

Bilateral contribution including donor’s share of an expected EC contribution subject to ACP approval.

Based on funding gap of $1.0 billion contingent on collective efforts to move to $1 billion as needed.

Based on funding gap of $800 million.

Based on funding gap of $650 million.

Based on funding gap of $1.0 billion provided IFAD is included in funding gap.

Amounts expected to increase by donor’s share of an expected EC contribution subject to ACP approval.

Bank staff estimate based on the cumulative donor contributions pledged to the HIPC TF through August 2002

(i.e., Phase I share).

Donor estimate based on Phase I share.

Best effort to maintain burdenshare after 2003 budgetary cycle.

D. Official Bilateral Creditors: Costs, Commitments and Delivery (Tables 9A, 9B, 10A, 10B)

Table 9B.

HIPC Initiative: Paris Club Debt Relief 1/ Status as of January 2003

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Source: Paris Club Secretariat.

For the 26 countries that have already reached the decision point under the Enhanced HIPC Initiative.

Completion point for Mali was approved by Executive Boards of the World Bank and IMF on March 6, 2003.

10. There are 50 non-Paris Club official bilateral creditors and their share of estimated debt relief to the 26 HIPCs that have reached their decision points is estimated at US$3.0 billion (2002 NPV terms—Table 10A). Of these, 12 creditor countries have committed to deliver full debt relief under the HIPC framework amounting to US$422 million (2002 NPV terms— Table 10B). This includes Libya, which agreed to participate in the HIPC Initiative in September 2002 and in February 2003 indicated to the Ugandan authorities its intention to provide US$160 million in debt relief to Uganda. A further 14 countries have delivered or agreed to deliver relief on some, but not all claims on HIPCs, representing US$2.0 billion (2002 NPV terms—Table 10B). Finally, 24 countries have not yet agreed to deliver any HIPC relief (representing US$609 million).

Table 10A.

HIPC Initiative: Estimated Non-Paris Club Official Bilateral Creditors’ Costs, by Creditor Country

(In millions of U.S. dollars, in 2002 NPV terms)

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Source: HIPC country documents; and IMF staff estimates. Countries whose names appear in bold italics have delivered or agreed to deliver relief on all claims on the 26 HIPCs. Figures surrounded by a box represent relief already delivered.

Total claims are less than $0.5 million.

Guatemala’s claims on Nicaragua were taken over by Spain in a debt swap. Spain has agreed to provide HIPC relief to Nicaragua on those claims.

Table 10B.

HIPC Initiative: Delivery of Assistance by Non-Paris Club Creditors Status as at January 2003

(In millions of U.S. dollars, 2002 NPV terms)

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Source: HIPC country documents, country authorities; and IMF staff estimates.

Total claims are less than $0.5 million.

Guatemala’s claims on Nicaragua were taken over by Spain in a debt swap. Spain has agreed to provide HIPC relief to Nicaragua on those claims.

9. All Paris Club creditors have committed to delivering their portions of the estimated US$9.2 billion (2002 NPV terms) in HIPC relief for the 26 countries which have reached the decision point (Tables 9A, 9B). In addition, a number of Paris Club members have voluntarily provided additional bilateral debt relief beyond the HIPC Initiative.

Table 9A.

HIPC Initiative: Estimated Paris Club Costs, by Creditor Country

(In millions of U.S. dollars, in 2002 NPV terms)

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Source: HIPC documents; and IMF staff estimates.

Creditors invited on a case-by-case basis.

11. The cost of HIPC relief for commercial creditors for relief to 34 countries is estimated at US$1.7 billion (2002 NPV terms) after traditional relief and US$644 million (2002 NPV terms) for the 26 countries which have reached the decision point (Table 4).

E. Effect of HIPC Debt Reduction on Debt Stocks, Debt Service and Social Spending (Tables 11A, 11B, 12A, 12B)

12. When debt relief to 26 HIPCs required under the HIPC Initiative is added to debt relief under traditional mechanisms and additional voluntary bilateral debt forgiveness, the total reduction in the outstanding debt stock is about US$40 billion in NPV terms.14 This is about two-thirds of the overall debt stock of these countries.

13. Compared with the levels recorded in 1998-99, average annual debt service due during 2001-05 for these countries is expected to be lower by about one third, with the difference averaging about US$1.2 billion per year (Tables 11A, 11B).

14. Debt service has declined from 17.5 percent of exports in 1998 to an estimated 9.9 percent in 2002, and is projected to decline further to about 7.0 percent by 2005 (Tables 11A, 11B). As a share of government revenue, debt service is expected to decline from over 27 percent in 1998 to below 15 percent beyond 2002.

15. Social expenditures are projected to have climbed from 5.9 percent of GDP in 1999 to 9.1 percent in 2002. At US$8.4 billion, this is almost four times the amount spent on debt service in 2002 (US$2.3 billion—Tables 12A, 12B).

Table 11A.

Summary Debt Service for 26 HIPCs that Reached Decision Points

(In million of US dollars, unless otherwise indicated)

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Source: HIPC country documents; and IMF staff estimates. Note: Debt service figures for 1998 and 1999 reflect debt relief already provided to Bolivia, Guyana, Mozambique and Uganda under the original framework.

The debt service figures for 2000 largely reflect pre-HIPC relief debt service because many countries did not reach their decision point until late in 2000 or later. Thus, the full impact of relief for them will not be felt until 2001 and thereafter.

Weighted averages.

Table 11B.

Debt Service for Individual HIPCs that Reached Decision Points, by Country

(In million of US dollars, unless otherwise indicated)

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Source: HIPC country documents; and IMF staff estimates. Note: Debt service figures for 1998 and 1999 reflect debt relief already provided to Bolivia, Guyana, Mozambique, and Uganda under the original framework.

Debt service due after the full use of traditional debt relief mechanism and assistance under the enhanced HIPC initiative. For Bolivia, Mauritania, and Mozambique, these figures are also after additional bilateral assistance beyond HIPC. For Burkina Faso, topping-up of debt relief is taken into account.

Debt service is higher than anticipated at the decision point due to higher new borrowing than previously projected.

On fiscal year basis, i.e. 2000 column shows FY 1999/2000.

The debt service figures for 2000 largely reflect pre-HIPC relief debt service because these countries did not reach their decision point until late in 2000 or later. Thus, the full impact of relief for did not take effect until 2001 and thereafter.

The increase in debt service payments in 2003 reflects lower than expected interim relief because of program interruptions, a delay in the completion point and the projected early repayment of emergency assistance to the Fund.

Debt service in 2002 is higher than anticipated at the decision point because the completion point has been delayed.

The increase in debt service in 2003 is due to Honduras receiving less debt relief than anticipated at the decision point.This shortfall is related to interruptions in the PRGF program and a delay in the completion point.

The relief for Madagascar is indicative and subject to change. The Madagasy authorities and Paris Club creditors would need to revisit the outstanding bilateral debt numbers. Also, minor adjustments need to be incorporated in the case of three multilateral creditors. Consequently, the IMF Board approved US$790 million in HIPC relief with the the understanding that Madagascar’s exact level of HIPC assistance will be determined once such revisions are made.

The relatively high debt service payments in 2003-05 reflect Zambia’s obligation to repay a large ESAF loan to the Fund. To lessen the debt service burden the Fund decided at the decision point, on an exceptional basis, that Fund assistance should amount to 75 percent of total Fund debt relief compared with the maximum of 60 percent otherwise applicable. It was also decided to accelerate delivery of Fund assistance, thereby lowering Zambia’s debt service payments in 2001-03 considerably. With the bulk of Fund assistance disbursed by 2003, debt service payments rise markedly in 2004 and 2005. However, in 2006 debt service payments to the Fund will decline sharply.

Debt service due in 2002/03 reflects a hypothetical assumption that arrears to non-Paris Club creditors (about US$2 billion) would be regularized and serviced. It also reflects upfront payments associated with debt rescheduling agreements.

Debt service reflects some payments to commercial creditors and payments on moratorium interest not reflected in the completion point document.

Debt service is lower than anticipated at the decision point due to lower financing needs than previously anticipated.

Table 12A.

Summary Social Expenditure by the 26 HIPCs that Reached Decision Points 1/

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Source: HIPC country documents; and IMF staff estimates.

Data is not available for all countries, particularly in 2003-05. To aggregate, the last available data were used for future years, thus understating the likely level of social spending.

Weighted averages.

Table 12B.

Social Expenditure for Individual HIPCs that Reached Decision Points, by Country

(In millions of US dollars)

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Source: HIPC country documents; and IMF staff estimates.

Data refer to pro-poor expenditure comprising health, non-university education, basic sanitation, and certain rural development and urban development programs.

The figures for 2000 largely reflect social expenditure before HIPC relief because these countries reached their decision points in late 2000 or in 2001. Thus, the full impact of HIPC relief for them will not be felt until 2001 and thereafter.

Data reported for Ghana do not cover all the expenditure by the health and education ministries. as it is missing donor flows and expenditure financed by internally generated funds.

Previous estimates for Guinea-Bissau were based on budget data. Because of a very low execution rate those numbers tend to overstate the actual level of social spending and have been omitted here. The estimate for 2002 is based on social expenditure outturns.

For countries without projections, the last available data are used in the aggregate total for future years, thus understating the likely level of social spending.

Country Coverage, Data Sources, and Assumptions for HIPC Costing Exercise

Country Coverage

  • The costing analysis is based on 42 HIPCs: Angola, Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Republic of Congo, Côte d’Ivoire, Ethiopia, The Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Kenya, Lao P.D.R., Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nicaragua, Niger, Rwanda, São Tomé and Príncipe, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, Vietnam, Yemen, and Zambia.

  • From the above list, Lao P.D.R., with debt deemed unsustainable after application of traditional debt-relief mechanisms, has been excluded from the costing exercise because reliable debt data are not yet available.

  • Yemen has been excluded from the costing exercise because its debt levels have been found to be sustainable after traditional debt relief, based on the latest debt sustainability analysis. In addition, Angola, Kenya, and Vietnam have been excluded because their debt levels are expected to be sustainable after application of traditional debt-relief mechanisms.

  • As in the past, Liberia, Somalia, and Sudan have not been included due to weaknesses in the data and/or the protracted time that will be required to resolve their arrears problems.

Data Sources

  • Enhanced decision point documents have been presented to the Boards of the Bank and the Fund for the following 26 countries: Benin, Bolivia, Burkina Faso, Cameroon, Chad, Ethiopia, The Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, São Tomé and Príncipe, Senegal, Sierra Leone, Tanzania, Uganda, and Zambia.

  • Recently collected debt figures have been used to update the potential cost estimates for Mali and the Democratic Republic of Congo.

Assumptions for the HIPC Costing Exercise

  • Calculations of total costs include costs under the original and enhanced HIPC Initiative frameworks, including assistance that has already been delivered.

  • Countries must make full use of traditional debt-relief mechanisms (i.e., a stock-of-debt operation which provides a 67 percent reduction in the NPV of eligible debt from the Paris Club, and comparable treatment by non-Paris Club bilateral and commercial creditors) before becoming eligible for assistance under the enhanced HIPC Initiative. The cost estimates are based on data after full use of traditional debt-relief mechanisms.

  • All eligible countries are assumed to request assistance under the enhanced HIPC Initiative.

  • Each country-specific DSA is based on macroeconomic assumptions regarding exports and fiscal revenues developed by Bank and Fund staffs in consultation with country authorities.

  • Total costs of assistance for Burkina Faso include topping up of debt relief (US$129 million in 2001 NPV terms), which is assumed to have been delivered in the same year as its completion point (2002).

  • Total costs of assistance to the Democratic Republic of Congo include relief provided by multilateral, bilateral and commercial creditors on short-term debt in arrears.

Update of Cost Estimates in Net Present Value Terms

  • The costs of HIPC assistance are calculated in NPV terms at the time of decision point. This cost has then been increased each year after the decision point year by a factor which is estimated as the average interest rate applicable for relief to be committed. This rate was estimated as 6.0 percent for the years, 2000 and 2001, respectively. In the costing exercise for end-2002, this factor was adjusted from 6.0 percent to 5.45 percent for 2000 and 2001 and a 5.45 percent rate was applied to increase costs from end-2001 to end-2002. The 5.45 percent rate corresponds to the implicit long-term interest rate of currencies which comprise the SDR15 for the 36 monthly periods from end-1999 to end-2002. It was calculated as a weighted average of the average Commercial Interest Reference Rate (CIRR) for the period 2000-02, the weights being the participation of the currencies in the SDR basket.

Implementation Status of the HIPC Initiative by Country

Section I. Status of HIPCs in the Interim Period As of January 2003

Benin

PRSP Status: Following broad-based discussions with civil society and development partners, the authorities finalized the full PRSP in December 2002. The Bank and Fund Boards are scheduled to discuss the PRSP in March 2003, along with the Joint Staff Assessment of the PRSP and HIPC Completion Point document currently under preparation. Poverty-reduction spending has steadily increased over the 2000-02 period, particularly in health and education although they remained below targets.

Policy Performance: The three-year PRGF arrangement was extended until end-March 2004. Benin’s macroeconomic performance in 2002 remained broadly in line with the objectives of the PRGF-supported program. All performance criteria for end-September 2002 were met, and the four structural benchmarks for end-July, end-August, and end-September 2002 were observed, although with delays. However, spending on health and education remained below quantitative targets, and the civil service reform continued to stall. All structural completion point triggers were met by end-January 2003 and the completion point is expected to be reached in March

2003.

Creditor Participation: Creditors holding 98.7 percent of Benin’s debt have committed to deliver HIPC relief. Interim assistance is being provided by the major multilateral creditors, the Paris Club and some non-Paris Club bilateral creditors. In addition, multilateral creditors including BADEA, IFAD, and IsDB have agreed to provide HIPC relief at the completion point. Some bilateral creditors (The Democratic Republic of Congo, The People’s Democratic Republic of Korea, and Niger) have not yet agreed to provide debt relief.

Cameroon

PRSP Status: A full PRSP was originally planned for November 2001 but was delayed because a comprehensive household survey (ECAM II) was launched only in the fall of 2001 and sector strategies for health, education, basic infrastructure and rural development took longer than expected. A draft PRSP was shared with the donor community and civil society at end-December 2002. The Government is making revisions in the light of comments, and a final version has been expected by the end of the first quarter of 2003.

Policy Performance: A third review of the PRGF was completed in September 2002. Performance was satisfactory except that a waiver was granted with respect to the completion of the treasury/budget link. The fourth PRGF review discussions are expected to be concluded soon. Progress has been slow in meeting the HIPC completion point triggers, notably structural reforms included under the Bank supported SAC III (the closing date of which has been extended until June 2003). Cameroon could reach the completion point during the first quarter of 2004.

Creditor Participation: Cameroon has received financing assurances from creditors accounting for more than 98 percent of total HIPC debt relief. With regard to commercial debt, agreement was reached on May 24, 2002 on a debt buyback operation supported by IDA. Two small commercial creditors are litigating although the authorities have indicated that these same creditors have expressed interest in a buyback operation. Paris Club creditors, the World Bank, the AfDB Group, and the Fund are providing interim assistance. So far, only Saudi Arabia has not yet committed to provide full HIPC relief.

Chad

PRSP Status: Completion of the full PRSP was delayed mainly because of revisions following a donor’s conference in Brussels in May 2002. A full PRSP is now almost finalized and is expected to be completed by end-March 2003. The PRSP and associated JSA could be presented to the Executive Boards of the IMF and the World Bank in early June 2003, and be followed soon after by a donor round table.

Policy Performance: A PRGF arrangement was approved in January 2000 and, after a fourth review in October 2002, it was extended to December 2003. Performance has been satisfactory and revenue collection, which currently stands at a modest eight percent of GDP, is improving. Additionally, progress is being made in structural reforms, albeit with delays in civil service reform and energy. Good progress is being made toward achieving the HIPC completion point conditions, although finalization of the full PRSP has taken longer than expected. It is expected that the completion point will be reached by the end of March 2004.

Creditor Participation: Satisfactory assurances were received from creditors accounting for 93 percent of Chad’s debt at the decision point. However, Cameroon, China, Israel, Kuwait, Saudi Arabia, Senegal, Taiwan Province of China, and Togo have not yet agreed to provide HIPC relief. Chad continues to receive HIPC interim assistance from IDA, the IMF, the AfDB Group and Paris Club creditors.

Ethiopia

PRSP Status: The full PRSP, completed in August 2002, builds on a broad-based participatory process and a sound poverty diagnosis. It places emphasis on food security and, more broadly, rural and agrarian development. It recognizes a need to shift expenditures from military outlays toward social spending. The near-term goal is to reduce poverty from 44 percent in 2000 to 40 percent by 2005. The first annual progress report is expected by the third quarter of 2003. The Bank’s strategy for supporting the PRSP is being addressed in the CAS for FY 03-05, currently under preparation.

Policy Performance: A third review of the PRGF arrangement was completed in September 2002. Performance during the first year of the program was good, with GDP growth in 2001/02 at 5 percent and inflation remaining negative. The second year’s program remains on track, although recent drought is affecting food production and causing food shortages in some regions. In order to foster agriculture growth and private sector development, the structural reform agenda remains essential, particularly in the areas of public expenditure management, civil service reform, and institutional capacity building in the public service. The estimated timing of the completion point is September 2003.

Creditor Participation: Creditors holding 91 percent of Ethiopia’s debt have agreed to deliver HIPC debt relief. The Paris Club creditors agreed to provide interim relief on Cologne terms in April 2002. IDA, AfDB and the IMF are also providing interim HIPC assistance.

The Gambia

PRSP Status: A full PRSP was completed in April 2002 and presented to the Bank and Fund Boards in July 2002. The PRSP focuses on promotion of growth and employment; improved delivery of social services; and stronger gender, HIV/AIDS, and environmental policies. Social spending was estimated to be about 6 percent of GDP in 2001, compared with debt service payments of about 3 percent of GDP in the same year.

Policy Performance: A new three-year PRGF arrangement was approved in July 2002, building upon a broadly encouraging economic performance under the previous arrangement. The first review of the new PRGF was expected to be completed in February 2003. There are plans for a Medium-Term Expenditure Framework which will expand on the work done in the sectoral Public Expenditure Reviews in education, health, and agriculture. One of the Bank’s six active projects (Municipal Development and Poverty Alleviation) is currently rated as unsatisfactory because of poor execution arrangements. Satisfactory progress, however, has been made on some completion point triggers including measures to improve transparency and accountability of public finances, and progress in the social sectors. However, progress on some completion point triggers targeting structural reforms has been slow. On the basis of the required one-year implementation of PRSP, the enhanced HIPC completion point will not be reached before July

2003.

Creditor Participation: Creditors holding about 81 percent of Gambia’s debt have agreed to provide HIPC debt relief. Three non-Paris Club official bilateral creditors (China, Kuwait, Taiwan Province of China) accounting for around 19 percent of HIPC relief, have not yet made any commitment.

Ghana

PRSP Status: The PRSP Preparation Status Report was reviewed in February 2002. The full PRSP was published in February 2003; endorsement by Bank and Fund Boards will be sought by early April 2003. Poverty-related spending is estimated to have increased to 6 percent of GDP in

2002.

Policy Performance: Due to slippages in budget execution and quasi-fiscal losses associated with the non-adjustment of domestic petroleum prices, Ghana’s PRGF arrangement expired without completion of the final review. The authorities have since drawn up a new program, and in April 2003 the Fund Board will be asked to support this under a new PRGF arrangement. The prices of electric power, water and petroleum products have been raised and petroleum product prices will be automatically adjusted in future. These measures will impact the budget favorably. Financial and management audits were conducted for 11 public sector enterprises and the Bank of Ghana Law was passed to enhance its independence. Progress on implementation of other HIPC completion point conditions has been broadly satisfactory, and if policies remain on track, the completion point could be reached in the second quarter of 2004.

Creditor Participation: Creditors accounting for around 89 percent of Ghana’s debt have agreed to provide HIPC debt relief. IDA, IMF, AfDB, European Investment Bank, and the Paris Club creditors are delivering interim relief. Other multilateral creditors will provide relief only at the completion point. The participation of large commercial creditors remains an issue.

Guinea

PRSP Status: A full PRSP was completed and adopted by the Council of Ministers in January 2002 and endorsed by the Fund and Bank Boards in July 2002. Social and poverty reducing spending has increased with the use of interim assistance. The authorities organized regional consultations to update the full PRSP. Regional poverty reduction strategies have been elaborated in December 2002 and the regional consultative process was deemed exemplary. A PRSP Progress Report is expected in the first semester of 2003.

Policy Performance: A first review of the PRGF was concluded in July 2002 after the authorities took measures in the first quarter of 2002 to correct weaknesses in revenue mobilization and catch up on priority sector spending. Since then, performance has been less than satisfactory largely due to budget overruns in non-priority sectors and a shortfall in revenue collection. The second review of the program was not completed due to unsatisfactory implementation of corrective measures. A new IMF Staff Monitored Program must be implemented before a new PRGF arrangement is put in place. Good progress toward reaching completion point triggers is being made despite some earlier delays. The completion point could be reached in March 2004, provided that Guinea performs satisfactorily under a new PRGF that could be put in place later this year.

Creditor Participation: Satisfactory assurances were received from creditors holding 85 percent of Guinea’s debt at the decision point. IDA, the IMF, the AfDB, and the Paris Club are providing interim assistance. So far, Iraq, Kuwait, Romania, Saudi Arabia, and Thailand have not agreed to provide HIPC relief.

Guinea-Bissau

PRSP Status: Reflecting the difficult political circumstances and severe technical weaknesses, progress toward a full PRSP has been slow. The authorities plan to finalize a first draft PRSP by mid-2003. The processing of data collected through the poverty survey was completed in September 2002. As a result of severe financial difficulties, social sector spending remains low at about 3.2 percent of GDP for 2002.

Policy Performance: The PRGF-supported program went off track immediately after it came into force at end-2000. The authorities have not been able to correct this situation, despite several efforts, including two short-term macroeconomic programs in 2001 and 2002. The completion of discussions on an extended staff-monitored program for 2003, which started at end-2002, has been delayed because of the dissolution of parliament and the dismissal of the government in November 2002, and elections scheduled for end-April 2003. Recurring fiscal policy slippages are associated with large defense spending, increases in the wage bill, and political interference in public financial management. Ad hoc expenditure policies and general weakening of government finances contributed to a substantial decline in economic activity; real GDP is estimated to have declined by more than 4 percent in 2002. Of the Bank’s six projects, the one on health is currently rated as unsatisfactory whilst there has been mixed performance on the education, economic rehabilitation and recovery projects. There have been encouraging, albeit slow, developments in addressing structural and social issues, such as in the areas of demobilization, public procurement reform, public enterprise reform, HIV/AIDS and education. Building a track record before the completion point remains a challenge and, as a consequence, reaching the completion point has been delayed until at least end-2004.

Creditor Participation: Creditors that have agreed to grant HIPC relief to Guinea-Bissau account for more that 81 percent of the country’s debt at the decision point. The AfDB, IFAD, the IMF, Paris Club creditors, and the World Bank have provided interim assistance, while China and Cuba have written off their claims. Agreements to reschedule arrears have been concluded with a number of multilateral creditors, but because of the continuing political and economic problems, they have not been implemented in most part. In view of the continuing nonperformance under the PRGF-supported program, the Fund suspended its interim assistance at the beginning of 2002 and the Paris Club decided in January 2003 to stop applying the agreement on providing interim debt relief for 2002 and 2003.

Guyana

PRSP Status: A PRSP was published in November 2001 and a macroeconomic addendum to the PRSP was completed in April 2002. Social spending has been increasing steadily, and is projected at 17 percent of GDP in 2002-03 and anticipated to move toward 18 percent of GDP in 2004-05. To support Guyana’s poverty reduction strategy two IDA credits were approved in December 2002: a Poverty Reduction Strategy Credit (PRSC) and a Public Sector Technical Assistance Credit.

Policy Performance: The PRGF went off-track in 2001, due to slippages in fiscal policy and stalled structural reforms. A new three-year PRGF-supported program was approved in September of 2002. However, the program went off track in December 2002 amid a very difficult political and deteriorating crime situation, delays in implementing critical growth-enhancing and poverty-reducing structural reforms, and difficulties in agreeing on measures to contain a significant deterioration in the fiscal deficit. Discussions for completion of the first review have continued in early 2003. The overall assessment of the Bank’s portfolio is satisfactory although not without difficulty. Governance reforms have been particularly difficult to implement and procurement legislation passed by Parliament in June 2002 had serious deficiencies. The World Bank is currently working with the authorities on a revised public procurement law that could be submitted to Parliament soon. Four completion point triggers still await implementation: a six-month track record of satisfactory performance under the PRGF; the submission to Parliament of satisfactory procurement legislation; legislation on investment incentives; and a program to downsize the civil service. The completion point could take place in the fourth quarter of 2003.

Creditor Participation: Creditors holding around 91 percent of Guyana’s debt have indicated their intention to deliver debt relief. IMF interim relief had lapsed at end-2001, but resumed in September 2002. The World Bank, IaDB and the Paris Club creditors are providing interim HIPC assistance. Argentina has begun negotiations with Guyana, and Brazil has already delivered HIPC relief. So far, China, Kuwait, the People’s Democratic Republic of Korea, U.A.E., Venezuela, and the Former Yugoslavia have not agreed to provide HIPC relief.

Honduras

PRSP Status: A PRSP was completed in August 2001 and the first annual progress report is expected by mid-2003. It appears that public expenditure in poverty reducing projects are running below the expected levels in 2001. Poverty-reducing spending amounted to 3.2 percent of GDP in 2001 and 2.5 percent in 2002, compared to 5.4 percent of GDP in 2001 and 5.9 percent in 2002 envisaged under the PRSP.

Policy Performance: The third review of a PRGF was completed in October 2001. The program subsequently went off track at end-2001 mainly due to fiscal policy slippages associated with a continued increase in the government wage bill and weak tax collection. The authorities are working to address the fiscal situation through a social pact involving political parties, labor unions, private sector and civil society. It is expected that the authorities would be able to present a new PRGF to the Fund Board by mid-2003. The Bank’s operations (seven active projects) are currently rated as satisfactory. Progress has been made in social reforms (education, health, pensions, and other safety nets), the anti-corruption strategy and financial sector strengthening. Completion point is expected in July 2004.

Creditor Participation: Creditors holding 93 percent of Honduras’ debt have indicated their intention to deliver such debt relief. The Paris Club and major multilateral creditors are delivering interim relief. However, interim relief from the World Bank and IDB ended in July 2002 because maximum ceiling for interim relief had been reached. Costa Rica, Mexico, and Venezuela have not yet agreed to provide HIPC relief to Honduras.

Madagascar

PRSP Status: Madagascar is behind schedule in preparing a PRSP. An election crisis in 2002 led to reform efforts being stalled for over six months and work in earnest on the full PRSP only resumed in late 2002. With the resolution of the political crisis, the Government has restarted work to finalize the PRSP and has established a timetable which currently envisions a final version in the first half of 2003. Revisions to the strategy are now necessary given the much changed economic and social conditions in the country. Budgetary allocations to priority social sectors have increased in recent years, with education spending projected to increase from 3.0 percent of GDP in 1999 to 4.5 percent in 2003 and health spending from 1.2 percent of GDP in 1999 to 2.5 percent in 2003.

Policy Performance: A PRGF arrangement was approved on March 1, 2001 and the second review was satisfactorily concluded on December 23, 2002. The World Bank is in the process of adapting and restructuring its program in the country with three immediate aims: (i) create/ strengthen safety net for the most vulnerable; (ii) assist in re-launching the private sector; (iii) assure functioning of minimum public services. Discussions on these areas have recently started with the new government. There are some delays in meeting conditions for reaching the HIPC completion point.

Creditor Participation: Satisfactory financing assurances have been received from creditors representing 91 percent of Madagascar’s total debt. Madagascar continues to receive interim HIPC assistance from IDA, IMF, AfDB, and the Paris Club. So far, non-Paris Club creditors have not agreed to provide HIPC relief.

Malawi

PRSP Status: The PRSP launched in April 2002 articulates a well-developed and sound strategy. There are detailed action plans to generate growth, improve social sector outcomes, protect the vulnerable, and improve governance. The resources made available from interim debt relief have been used to fund an expansion in pro-poor spending programs, including the health and education expenditures identified in the PRSP as primarily benefiting the poor. Social expenditures, more broadly defined, for 2002 are estimated at 11 percent of GDP.

Policy Performance: Malawi’s PRGF program went off-track soon after its approval in December 2000, mostly due to large slippages in fiscal policy. The first review could be completed by end-July, 2003. The World Bank has 10 active credits in Malawi, of which three projects (Environment Management, Fiscal Restructuring and Deregulation Project III TA, and Privatization and Utility Reform) currently have an unsatisfactory rating. Malawi has made good progress toward the fulfillment of HIPC completion point triggers. However, there is need to make substantial progress on the maintenance of macro stability. The completion point could be reached by the end of 2003 if Malawi demonstrates six months of good performance under the

PRGF.

Creditor Participation: Malawi is receiving interim relief under the enhanced HIPC Initiative from IDA, AfDB, EU/EIB, and the Paris Club. IMF relief for 2002 is pending the conclusion of the first PRGF review. With respect to non-Paris Club creditors, South Africa has written off its debt; no agreement has yet been reached with Taiwan Province of China.

Nicaragua

PRSP Status: A full PRSP was presented to the IMF and World Bank Boards in September 2001 and the first annual PRSP Progress Report was completed in November 2002. Implementation of the PRSP has progressed since the Decision Point (December 2000) despite political difficulties. Poverty-reducing expenditures are projected to increase by about four percent of GDP by 2004-05, compared to pre-hurricane Mitch levels. A mechanism for tracking the use of HIPC debt relief and poverty spending was designed in 2002 with IDA assistance, and is expected to be operational in 2003.

Policy Performance: Nicaragua reached the decision point in December 2000, but experienced policy slippages in early 2001, particularly in the fiscal and monetary areas. Discussions for a third annual arrangement could not be completed during the first part of 2001, and the authorities requested a Staff-Monitored Program (SMP) for July-December 2001. The new government took office in January 2002 and reined in government spending through administrative means and a reduction in the budget. Nicaragua’s assembly also approved the first round of a tax reform package, and, to reduce financial sector vulnerabilities, the authorities are about to implement a recovery plan for assets of failed banks. Based on this renewed commitment, the IMF Board approved in December 2002 a new three-year PRGF arrangement covering October 2002-September 2005. Progress is being made toward the HIPC completion point triggers, with most measures being prepared and/or partially implemented. The completion point, originally expected for end-2002, is now expected by end 2003.

Creditor Participation: Financing assurances have been received from creditors holding 86 percent of total debt. In principle, all multilateral and Paris Club creditors have agreed to participate, as well as the following non-Paris Club creditors: Bulgaria, Costa Rica, Czech Republic, Guatemala, Honduras, Hungary, India, Iran, Libya, Mexico, and the Slovak Republic. So far, Algeria, China, the People’s Democratic Republic of Korea, Peru, Poland, Taiwan Province of China, Venezuela, and the Former Yugoslavia have not agreed to provide HIPC relief. Interim relief is being provided by the World Bank, the IMF, the IaDB, CABEI, and the Paris Club.

Niger

PRSP Status: A full PRSP was submitted to the Executive Boards of the Fund and the Bank in January 2002. It foresees an increase in social spending from 5 percent of GDP in 2001 to 7 percent through 2005 to address poor social indicators. A PRSP Progress Report is expected in early 2003 and, together with the Joint Staff Assessment, will be presented to Bank and Fund Boards during the second quarter of 2003.

Policy Performance: A PRGF arrangement was approved on December 14, 2000. A third review was completed in August 2002 and Niger’s performance was considered satisfactory. However, four of ten performance criteria and benchmarks had not been met and waivers were granted. Despite some budget slippages, overall performance was satisfactory with economic growth rebounding to 7.6 percent and inflation declining to 3.2 percent in 2001. A fourth review of PRGF is expected in April 2003. There has been significant progress in meeting the completion point triggers although an evaluation of the impact of public spending on the poor remains to be done. Niger could reach the completion point during the third quarter of 2003, once the one-year Progress Report on the PRSP is presented to the Bank and IMF Boards.

Creditor Participation: Niger has financing assurances for about 81 percent of total debt relief. Most non-Paris Club official bilateral creditors (Iraq, Saudi Arabia, Taiwan Province of China, and U.A.E.) and two multilateral creditors (Conseil de l’Entente, ECOWAS) have not yet committed to provide debt relief. China has granted partial debt cancellation. Niger received adverse judgment in a U.S. court for claims held by Taiwan Province of China. The AfDB, IDA, the IMF, OPEC Fund, and Paris Club creditors have provided interim assistance. IFAD has committed to full debt relief at the completion point.

Rwanda

PRSP Status: A PRSP was completed in June 2002 and was discussed by the Boards of the Bank and the IMF. The PRSP identifies six broad areas as priority: (i) rural development and agricultural transformation; (ii) human development; (iii) economic infrastructure; (iv) good governance; (v) private sector development; and (vi) institutional capacity building. Spending in social sectors has been steadily increasing and this trend is projected to continue. It stood at 3.9 percent of GDP in 1999 and rose to 5.3 percent by 2001. It is further projected to rise to 6.6 percent by 2003 and 7.1 percent by 2005.

Policy Performance: The 1998-2002 program supported by a PRGF expired in April 2002 without completion of the final review. On July 24, 2002, the Fund Executive Board approved a new three-year PRGF program. Real GDP grew by 6.7 percent in 2001 with strong performance in agriculture, manufacturing, construction, transportation and communication. Performance was also satisfactory with respect to fiscal revenue collection, inflation, and the level of gross reserves. Progress is being made in completing most of the completion point triggers, including

the privatization of tea factories. The completion point is expected to be reached in the third quarter of 2003.

Creditor Participation: Financing assurances have been received from creditors providing 95 percent of debt relief. Interim assistance has been provided by AfDB, IDA, the IMF, and the Paris Club. In addition, the EU, IFAD, and the OPEC Fund have agreed to provide HIPC relief. So far, non-Paris Club creditors have not agreed to provide HIPC debt relief.

São Tomé and Príncipe

PRSP Status: A full PRSP is expected to be submitted to the World Bank and IMF in April 2003. The Board date is scheduled for June 2003. The first annual progress report is expected to be produced by June 2004.

Policy Performance: A PRGF-supported program went off track in 2001 due to fiscal and structural reform slippages, compounded by oil-sector governance concerns. Implementation of the subsequent IMF staff monitored program (SMP) during the first half of 2002 was disappointing, as key quantitative benchmarks for end-June 2002 were not observed. There were spending overruns owing to trade union wage demands, higher energy and utility costs and legislative elections of March 2002. The staff-monitored program was extended through end-December 2002 to enable reestablishment of a track record of policy implementation. Preliminary information indicates that program implementation in the second half of 2002 was broadly satisfactory. Negotiations for a new PRGF arrangement are expected to start in late-March of 2003. Significant progress toward the HIPC completion point triggers is being made. The completion point originally scheduled for end-2003 could be reached by mid-2004, provided a PRGF program is in place and has been satisfactorily implemented.

Creditor Participation: Financing assurances for HIPC relief have been received from creditors holding about 85 percent of debt. Interim assistance is being provided by IDA and AfDB. Bilateral debt renegotiation agreements on Naples terms were signed with France and Spain in 2001, while agreements have been concluded, but remain unsigned, with Belgium, Germany, Portugal, and Russia. Non-Paris Club bilateral creditors (Algeria, Angola, Cape Verde, and China) have not yet agreed to provide HIPC relief.

Senegal

PRSP Status: A full PRSP, discussed by the Bank and Fund Boards in December 2002, was organized around consistent themes of wealth creation, human development, macroeconomic stability and improved public expenditure management. Expenditure in education declined slightly from 3.5 percent of GDP in 2000 to 3.4 percent in 2002. Expenditure in the health sector remained at about one percent over the period.

Policy Performance: The second review of the PRGF-supported program was concluded on April 5, 2002, but the PRGF arrangement subsequently expired on April 19, 2002. A new arrangement is expected possibly in the first half of 2003. The dialogue with country authorities has been continuing on the basis of their reform strategy outlined in the PRSP. Progress in meeting completion point triggers has been slow, particularly in health, education and privatization. The country could reach its completion point in the fourth quarter of 2003, contingent on the successful negotiation and implementation of a new PRGF arrangement.

Creditor Participation: Senegal has financing assurances for about 79 percent of total HIPC debt relief. Non-Paris bilateral creditors (Algeria, China, Iraq, Kuwait, Oman, Saudi Arabia, and U.A.E), and three multilateral creditors (BCEAO, ECOWAS, IsDB) have not yet agreed to provide debt relief to Senegal. All remaining creditors have committed to provide debt relief to the country. The World Bank, AfDB, EU, BOAD, the IMF, and Paris Club creditors have provided interim assistance. The IMF suspended interim debt relief at end-2002, pending a new PRGF program.

Sierra Leone

PRSP Status: An Interim-PRSP was completed in September 2001. The final PRSP was originally expected by mid-2003, but it was delayed pending the full disarmament and demobilization of RUF rebels, the resettlement and reintegration of internally displaced persons, refugees and ex-combatants, as well as the holding of presidential and parliamentary elections. Despite these delays, significant progress has been achieved in establishing the governance and institutional arrangements. Participatory data and information collection has commenced (e.g., HIV/AIDS Survey). Some sector reviews have been completed (e.g., Transport Sector Strategy), others are being prepared (Rural Sector Review) or are planned for key sectors (e.g., Education and Infrastructure).

Policy performance: A PRGF arrangement was approved in September 2001. The second review was successfully completed in September 2002. The improved political and security situation has strengthened confidence and helped in sustaining the economic recovery. Structural reforms have been strengthened, and presidential and parliamentary elections were held peacefully in May 2002. A consultative group meeting took place in November 2002. Donors agreed to provide financial and technical assistance to consolidate the peace process. The completion point is expected by end-2004 once a full PRSP has been prepared and implemented satisfactorily for a year.

Creditor participation: Financing assurances have been secured from creditors (multilateral creditors and the Paris Club) holding 84 percent of the Sierra Leone’s debt. Two non-Paris Club official bilateral creditors (China and Kuwait) as well as commercial creditors have not yet indicated their intention to deliver HIPC relief. Interim assistance is being provided by most multilateral creditors and the Paris Club (a topping-up to Cologne terms was provided by the Paris Club soon after the decision point).

Zambia

PRSP Status: A full PRSP was received in April 2002 and considered by the Bank and Fund Boards. It aims to promote growth and diversification in production and exports, improve delivery of social services, and foster policies for HIV/AIDS, gender and the environment. Poverty-reducing spending was lower than programmed due to initial difficulties in establishing an accounting framework and lack of implementation capacity. Priority poverty-reducing programs amounted to 1.1 percent of GDP in 2000, 2.1 percent in 2001, and is projected to have been 2.2 percent of GDP in 2002.

Policy Performance: A fifth review of the PRGF was successfully completed in November 2002, notwithstanding capacity constraints and an adverse external environment, particularly in the copper sector. The government’s financial policies in 2002 allowed for a reorientation of

public expenditure toward the social sectors. Despite a wage bill overrun which is being corrected, the overall fiscal outturn for 2002 is expected to be on track. With regard to the floating completion point triggers, progress is being made to divest a controlling share of ZNCB and ZESCO. Triggers in the health sector (including on HIV/AIDS) have been fully or partially implemented. While triggers in the education sector (budget outcome, student retention) are not yet achieved, corrective actions are being taken. The completion point is expected in December 2003.

Creditor Participation: Financing assurances have been received from creditors holding around 97 percent of total debt. IDA, the IMF, the AfDB, EU, and the Paris Club have provided interim relief. So far, Bulgaria, China, Iraq, Romania, and Saudi Arabia have not agreed to provide HIPC relief.

Section II. Status of Countries Expected to Reach Their Decision Points

After February 2003

The following notes provide information on the status of 12 HIPC-eligible countries that could reach their decision points after February 2003. Two countries (Cote d’Ivoire and the Democratic Republic of Congo) have had Preliminary Documents submitted to the Fund and Bank Boards. This section does not include HIPCs whose debt burden is expected to be sustainable1.

Burundi

PRSP Status. A peace agreement was signed in August 2000 in Arusha, Tanzania, by 19 political parties in an attempt to bring Burundi’s civil conflict to an end. Agreement was reached in July 2001 on the installation of transitional institutions for a three-year period to lead to full democratization. The transitional arrangements culminated in the installation of an inclusive Transition Government on November 1, 2001, and the installation of the Transition Parliament and Senate in January 2002. Burundi launched its PRSP process in July 2000 and a draft I-PRSP was discussed by donors within the context of a thematic round table meeting in April 2002. The Burundi authorities are incorporating comments provided by the development partners, and the final I-PRSP is expected in the first quarter of 2003. The Bank has been providing assistance in the areas of consultation and participatory diagnostic analysis, and the Burundi authorities recently requested further assistance in this area within the context of the full

PRSP.

Policy Performance. In July 2001, agreement was reached on a staff monitored program (SMP) covering the period July 1 through December 31, 2001. In October 2002, the IMF Board approved a post- conflict assistance facility for Burundi. This post-conflict assistance program as well as the IDA support under the Economic Rehabilitation Credit (ERC), is expected to be a catalyst for donor assistance, including HIPC debt relief. IDA is currently supporting Burundi with the ERC, and a number of other projects planned in the context of the Transitional Support Strategy (TSS). The TSS, which was approved by the World Bank Board on March 7, 2002, underpins IDA assistance to Burundi during FY 02-03 and, in addition to the ERC, envisages exceptional IDA assistance to Burundi for HIV/AIDS, capacity building, health care, demobilization and reintegration, and social action.

Creditor Participation. Preliminary analysis indicates that Burundi has a heavy debt burden. However, it has managed to remain current in its debt service obligations to the Bank and the Fund but is in arrears to the AfDB. A Multilateral Donor Trust Fund has been set up to assist Burundi clear its arrears and pay its debt to its multilateral creditors during the period leading to the enhanced HIPC Initiative. A number of donors have already made their contribution to this Fund.

Central African Republic

PRSP Status: An interim PRSP (I-PRSP) was presented in January 2001. The I-PRSP emphasized the importance of rapid and broad-based economic growth, accompanied by a stable macroeconomic framework as prerequisites for poverty reduction. However, the I-PRSP did not set poverty reduction goals along the lines of the background of the Millennium Development Goals (MDGs), and did not discuss a macroeconomic framework beyond 2001. The Joint Staff Assessment (JSA) of the I-PRSP, stressed that the PRSP would need to address weaknesses observed in the preparation of the I-PRSP. In particular, the work leading to the preparation of the PRSP would need to improve the statistical database; strengthen the participatory process; better prioritize the objectives for poverty reduction; clearly define quantitative targets for poverty reduction in the context of a detailed costing and financing exercise; and design an effective system for monitoring progress in reducing poverty, including the tracking of poverty outlays. The full PRSP could be presented during the first half of 2004.

Policy Performance: In October 2001, the authorities agreed with Fund staff on a six-month staff monitored program (SMP). The successful completion of the SMP in June 2002 led to an agreement with the Fund on a three-year program to be supported by a Poverty Reduction and Growth Facility (PRGF). However, an attempted coup d’état in October 2002 led the Fund to postpone consideration of the PRGF. New discussions, which are scheduled between the authorities and the Fund to ascertain if the security situation, the capacity to implement reforms and financing prospects, could lead to a new program supported by Fund resources. At present, the financing prospects are bleak with major arrears to multilateral creditors, notably the African Development Bank. Central African Republic is in non-accrual status with the World Bank since June 2002. At end-January 2003, the arrears with the World Bank stood at US$13.3 million. The World Bank is preparing a Country Re-Engagement Note. t will focus on governance-related analytical work and modest grant assistance, and will provide an arrears clearance plan, to be implemented once a Fund program is in place. As the authorities would need to build a six-month track record under a PRGF, the timing of the HIPC decision point is uncertain.

Comoros

PRSP Status: Following a period of political conflict and the secession of Anjouan, a new constitution was adopted by referendum in December 2001. The name of the country was changed to “Union des Comores.” General and regional elections in the three islands followed in March, April, and May 2002. Colonel Azali was elected president of the union. However, a dispute erupted over the sharing of resources and important questions remain on the competencies of elected institutions. An Interim PRSP (I-PRSP) is expected to be finalized in the second half of 2003 but also depends upon the resolution of political conflict.

Policy Performance: Disputes between Union and island governments over competencies and revenue sharing disrupted the IMF’s staff monitored program (SMP) in July 2002. This will delay debt relief under the HIPC initiative for 12 months. Should conditions improve, a new SMP could be instituted in 2003, leading to a PRGF in Spring 2004 and a HIPC decision point by end-2004.

Congo, Republic of

PRSP Status: The World Bank is providing technical assistance to strengthen the content and the participatory process of the Interim Poverty Reduction Strategy Paper that had been prepared by the authorities without adequate consultation with the civil society.

Policy Performance: The Republic of Congo received Fund support under the emergency post-conflict assistance policy in November 2000. Since then, the Congo has had difficulties establishing a good track record under two successive staff-monitored programs (SMP) in 2001 and 2002, owing essentially to the Congolese authorities’ focus on the national reconciliation dialogue, organization of broad based elections to mark the end to a long democratic transition process, and security-related developments. Consequently, discussions on a medium-term program that could be supported by the Fund under the PRGF and open the way to possible debt relief under the enhanced HIPC Initiative could not be initiated as envisaged. A new six-month SMP, covering January-June 2003 will be negotiated in March 2003 to allow the authorities to establish a track record of adequate policy performance.

On July 31, 2001, the IDA Board approved a post-conflict economic rehabilitation credit and an emergency demobilization, disarmament and reintegration credit. The Congo cleared its arrears to the Bank on August 8, 2001, paving the way for the disbursement of already approved credits and new IDA lending. In addition, a recently approved Governance and Transparency Capacity Building Project will help finance an external audit of the national oil company (SNPC) and, at a subsequent stage, an audit of the entire oil sector.

Congo, Democratic Rep. of

PRSP Status: The I-PRSP was completed in June 2002 and completion of a full PRSP is expected in early 2005. Social sector spending is targeted to increase from 7 percent of primary expenditure (0.5 percent of GDP) in 2002 to about 16 percent in 2003 (about 2 percent of GDP), to remedy the poor quality of, and access to, social services.

Policy Performance: A PRGF-supported program was approved in June 2002 after successful implementation of an IMF staff monitored program. Progress continues with an economic reform program under which the public finances have been strengthened, the cycle of hyperinflation and currency depreciation has been broken, major economic distortions are being removed, and significant improvements have been made in the judiciary and regulatory environment. Important reforms are also under way in the forestry, mining, and public enterprise sectors.

HIPC Status: The preliminary HIPC document was considered in June 2002. Arrangements have been put in place to clear arrears to multilateral creditors, and for the IMF and World Bank this was done in June/July 2002. The Paris Club granted a Naples flow rescheduling for nearly US$9 billion of arrears and debt service coming due during the PRGF period. The first review under the PRGF should be completed by end-March is and the decision point could be reached shortly thereafter.

The timing of a possible three-year PRGF arrangement and the HIPC decision point will depend on progress in the implementation of the new SMP with a focus on improved fiscal performance, progress in transparency in the oil sector, and the normalization of relations with external creditors.

Côte d’Ivoire

PRSP Status: The IMF and the World Bank Boards endorsed the I-PRSP in March 2002. A first draft of the full PRSP was prepared in September 2002 and is being reviewed by the Bank and Fund staff. Social sector spending by the central government fell slightly from 4.6 percent of GDP in 2000 to 4.3 percent of GDP in 2001, but has been projected to increase to 4.8 percent in 2002. However, with the civil conflict erupting in September 2002, social expenditures have come under pressure in late 2002 and early 2003. Both the preparation of a full PRSP and implementation of anti-poverty measures are at peril until civil peace can be restored.

Policy Performance: A three-year PRGF arrangement was approved on March 27, 2002 following the successful implementation of a staff monitored program under which the authorities demonstrated disciplined macroeconomic management and commitment to structural reforms. The IMF and the World Bank Boards discussed a preliminary HIPC document in March 2002. Due to civil strife which started in September 2002, the HIPC decision point could not be reached in 2002.

Lao P.D.R.

PRSP Status: In April 2001, an I-PRSP was considered by the Bank and Fund Boards and the final PRSP is expected by end-September 2003.

Policy Performance: In April 2001, the Fund Board approved a new three-year PRGF arrangement with Lao P.D.R. The first review of the program was completed in February 2002 and the second review in July 2002. However, the PRGF is currently delayed pending measures by the authorities to prevent a recurrence of misreporting and measures to get the fiscal program back on track. In 2002, IDA approved a Financial Management Adjustment Credit.

HIPC Status: A HIPC debt sustainability analysis is planned for June 2003. Agreement on the value and terms of debt has yet to be reached with one of Lao’s bilateral creditors. The authorities have expressed the intention not to apply for HIPC debt relief.

Liberia

Liberia continues to struggle with the loss of economic infrastructure and the human costs resulting from the civil war of 1989-96. In 2001, Liberia’s relations with the international community deteriorated sharply after allegations of human rights abuses, support for an armed insurgency in Sierra Leone, and widespread government corruption. Relations between Liberia and the Bank and Fund have remained on hold pending the lifting of sanctions imposed by the UN in May 2001. Liberian authorities had adopted a Staff-monitored program with the intent of establishing a record of policy performance. Although some advances were made under the staff monitored program, the policy performance record was not sufficient to proceed with a PRGF. In December 2001, Article IV consultations were held.

Liberia at end-2001 was estimated to hold US$2.6 billion in debt including nearly US$2.3 billion in arrears. Of this, roughly 53 percent was held by multilateral creditors and official bilateral creditors held 27 percent.

Myanmar

There has been no Fund-supported program since 1981-82 . The World Bank has approved no new lending since 1987 and does not have an active program in Myanmar. Poor debt statistics make an assessment of the debt burden difficult.

Somalia

A National Reconciliation Conference, under IGAD auspices, was concluded in October 2002. UNDP implementation of the Post-Conflict Fund (PCF)—financed Watching Brief was delayed because of deteriorated security conditions. However, if security improvers with the on-going reconciliation efforts, implementation could start in early 2003. The Bank recently became an active member of the Somalia Aid Coordination Body (SACB) which provides a framework for UN agencies, international and Somali NGOs, and donors to develop a common approach for the allocation of international aid to Somalia. Recent donor support has been limited to humanitarian assistance and disaster relief.

Policy Performance: The World Bank and IMF have not had an active involvement in Somalia since 1991 because of an unstable security situation, and lack of recognition of the current interim government. Significant arrears have accumulated on past debt-servicing obligations to both institutions. The Bank strategy for Somalia is two-pronged: (i) to build the analytical knowledge base through the collection, analysis and monitoring of key macro-economic and socio-economic data by UNDP; and (ii) to continue funding the second phase of a very successful project, implemented by the Somali Red Cross, for the sustainable rehabilitation of basic health services in areas affected by conflict. These components of the strategy constitute the Somalia Watching Brief which was approved by the Bank’s PCF Committee on February 8, 2002 for a total of US$1 million.2

Sudan

PRSP Status: On November 18, 2002 the Government of Sudan and the Sudan People’s Liberation Movement/Sudan People’s Liberation Army signed a Memorandum of Understanding whereby both parties agreed in principle to a government structure, including power sharing, judiciary and human rights. The parties also have committed to continue to search for lasting peace and resolve all outstanding issues (revenue sharing being one of the most important) and incorporate them into a final peace agreement. The government is currently preparing a Comprehensive Strategic Plan and an Interim Poverty Reduction Strategy Paper (I-PRSP).

Policy Performance The IMF Board mid-year review of a staff monitored program was concluded in October 2002. If the peace process advances and there continues to be progress with reform, a Rights Accumulation Program (RAP) may be put in place. The Bank is developing a re-engagement strategy, including options for the clearance of arrears, which stood at US$244 million at end-January 2003. Contingent on the peace agreement, a Support Group will be set up to assist authorities in clearing the arrears.

Togo

PRSP Status: The Government issued a draft interim PRSP in November 2002. This report will be discussed with domestic and external stakeholders before its finalization during the first quarter of 2003. The authorities plan to carry out various economic and sector work, and a broad-based participatory process, in order to complete a full PRSP by mid-2004. In the absence of a stable macroeconomic framework, the interim PRSP would not be discussed at the Bank and Fund Boards. However, it will be shared with the donor community to serve as anchor for their assistance programs. .

Policy Performance: There has not been a Fund-supported program since mid-1998 when the three-year ESAF expired. The IMF Executive Board concluded the 2001 Article IV consultation with Togo in April 2001, and a staff monitored program covering the period April-December 2001 was put in place. In the context of the 2002 Article IV consultations, the government prepared an economic program covering 2002 to serve as a basis for continued policy dialogue with the Fund and the Bank, pending a full resolution of the present political situation and resumption of external budgetary assistance. The holding of free and fair elections continues to be a condition set by Togo’s main donors for the resumption of financial assistance. The IDA Economic Recovery and Adjustment Credit (ERAC) was closed at the end of 1998. Because of new accumulation of arrears by end December 2001, Bank disbursements were again suspended on January 1, 2002 and the country has been on non-accrual status since May 1, 2002. At end January 2003, the arrears with the World Bank stood at US$20.5 million.

Section III. Status of Countries that Have Reached The Completion Point As of January 2003

Bolivia

PRSP Status: A PRSP was completed in March 2001 and the first progress report is being prepared. Tracking of poverty-related expenditure requires improvement especially at the local government level. Social spending has reached 12 percent of GDP in 2002 and is projected to increase to 13 percent in 2003.

Policy Performance: The third year program under the PRGF arrangement expired in June 2002. The first review could not be completed owing to lack of action on tax reform. Under program informally monitored by the IMF staff for 2002, targets for international reserves and net domestic assets were missed in the second quarter and fiscal targets were missed in the third quarter. A stand-by arrangement negotiated in February 2003 may be approved in March, and might be replaced by a PRGF arrangement later in the year. A joint Bank-Fund team conducted a Financial Sector Assessment Program (FSAP) in November 2002 and January 2003. The completion point was reached in June 2001.

Creditor Participation: Creditors holding around 95 percent of debt—including all multilateral creditors—have been delivering debt relief and some Paris Club creditors have already provided relief beyond HIPC. Assurances of debt relief have not been provided by China and Taiwan Province of China, and the agreement to receive assistance from Brazil is pending approval by the Brazilian congress.

Burkina Faso

PRSP Status: A second progress report on the implementation of the PRSP was considered by the Boards of the IMF and the Bank in November 2002. Total poverty-reducing social expenditures increased from 5.3 percent of GDP in 1999 to 6.2 percent in 2001, and a further increase to 7.9 percent of GDP is expected in 2002.

Policy Performance: The sixth review under the PRGF was completed on November 2002. For the first time in three years, the authorities were able to reverse the decline in tax revenue in 2001. The PRGF-supported program (approved September 1999) is largely on track despite an expenditure overrun in the first half of 2002, which was attributable to exogenous factors and to election related outlays. Significant progress has been made towards achieving poverty reduction objectives. Budgetary expenditures in the social areas were increased and there was a marked acceleration in the commitment of HIPC Initiative resources to make up for the slow start during the past two years.

Creditor Participation: Creditors accounting for 88 percent of debt have agreed to provide enhanced HIPC relief. Financing assurances for the topping-up at the completion point have been obtained from IDA, AfDB, the IMF, BOAD, and Paris Club creditors, which together constitute 74 percent of total topping-up assistance.

Mali

PRSP Status: A full PRSP was endorsed by the Fund Board in February 2003 and by the Bank

Board in early March. Budgetary allocations to priority sector sectors have increased steadily in

line with the I-PRSP. Social expenditure increased from 4.4 percent of GDP in 2000 to

4.8 percent in 2002. It is projected to decline to 4.3 percent of GDP in 2003, due mainly to lower

than expected increases in health spending but should reach around 5 percent from 2006

onwards.

Policy Performance: A PRGF-supported program has been on track since the country reached the enhanced HIPC decision point in September 2000 and a fifth review of the program was completed in February 2003. Economic growth was strong in 2002 as a doubling of cotton output boosted real GDP growth by 9.6 percent. The fiscal program was on track at end-June and end-September 2002, with total government revenue higher and government expenditure lower than anticipated. The crisis in Cote d’Ivoire has hit Mali’s economy severely since September 2002. As a result and owing to lower rainfall, growth is projected to decline by 0.4 percent in

2003.

Creditor Participation: Mali has financing assurances from creditors holding 93.5 percent of total debt. Some non-Paris Club bilateral and commercial creditors, and three multilateral creditors have not yet agreed to provide debt relief to Mali. IDA, the IMF, the AFDB Group, EU, and Paris Club creditors have provided interim assistance.

Mauritania

PRSP Status: A full PRSP was finalized in early 2001 and endorsed by the Boards of the World Bank and the Fund; the one-year progress report was endorsed by the two Boards at the time of Mauritania’s completion point in June 2002. Social and poverty reducing spending has been increased with the use of domestic resources and HIPC assistance. However, more work is needed to improve expenditure tracking (with technical assistance from the Fund and the Bank) and strengthen implementation capacity to allow full use of resources freed up by HIPC relief. A PRSP review is planned for July 2003.

Policy Performance: The Fund Board completed the sixth review of the PRGF program in November 2002, and noted Mauritania’s strong economic performance in spite of a difficult external environment. The PRGF arrangement expired on December 20, 2002, with the last disbursement of SDR 6.07 million. Following the request of the authorities, IMF staff will assess the need for a new PRGF. Economic growth has been robust though lower than projected in 2002 due to droughts and a drop in fish and iron ore exports. Inflation has been under control and the external position has improved despite the increase in trade deficit. Structural reforms have created an environment conducive to foreign and domestic investment. The country remains vulnerable to downside risks that could undermine its external position.

Creditor Participation: The completion point was reached in June 2002. Satisfactory financing assurances were received from creditors holding over 80 percent of Mauritania’s debt. So far, non-Paris Club creditors, except Saudi Arabia, have not agreed to provide HIPC relief. The Arab Monetary Fund recently agreed to provide full HIPC relief to Mauritania.

Mozambique

PRSP Status: The PRSP, which was endorsed by the Boards of the Bank and the Fund in September 2001, has been central in guiding the government’s efforts to improve social welfare conditions and track poverty-reducing expenditures. HIPC-financed spending is being allocated to priority areas that have been identified in the PRSP (PARPA). The PARPA priority sectors are in education, health, agriculture and rural development, basic infrastructure, good governance, and macroeconomic and financial management. Recent developments in social spending continue to be favorable with such expenditure reaching 9 percent of GDP in 2002 and expected to stay at around that level for the 2002-05 period.

Policy Performance: The fourth review under the PRGF arrangement was satisfactorily completed in June 2002. All quantitative and structural performance criteria and benchmarks were observed, except for a benchmark on reserve money. The macroeconomic outlook for Mozambique remains positive. Preliminary estimates indicates that GDP grew in 2002 by about 12 percent, while inflation stood at 9.1 percent, well below the level observed in 2001 (21.9 percent). For years 2003-04, it is expected that GDP growth would stabilize at around 9 percent per year. The HIPC completion point was reached in September 2001.

Creditor Participation: The completion point was reached in September 2001. Creditors holding about 88 percent of Mozambique’s debt are providing debt relief. Several non-Paris Club official bilateral creditors have yet to respond to letters sent by the Mozambican authorities to begin negotiations for bilateral debt relief agreements on enhanced HIPC terms. Positive responses had been obtained from India and in principle from Libya, but further negotiations are needed to finalize the agreements. The Mozambican authorities have indicated that relief on non-Paris Club official debt has been completed with China, Kuwait, and South Africa.

Tanzania

PRSP Status: The poverty reduction strategy enjoys broad support and ownership. By the time the current PRGF expires, Tanzania is expected to have prepared two annual PRSP progress reports. Expenditure on health and education has been rising since fiscal year 1999/00. New education, agriculture, and rural development strategies are high-priority areas of the PRSP.

Policy performance: The Fund Board completed the fifth review under the PRGF arrangement in November 2002. The current PRGF, originally due to expire in early 2003, was extended until end-June 2003 to allow time for the final review to be completed. While Tanzania has achieved commendable progress in implementing macroeconomic and structural reforms in the last seven years, the country still faces a substantial reform agenda and other policy challenges that will require continued Fund engagement. The exit from Fund financial support may also be constrained by the linkage of donor support to a Fund-supported program. A new low access PRGF arrangement—largely focusing on ongoing structural reforms and second-generation reforms—may be envisaged. The focus of the current PRGF is on consolidating macroeconomic stability and achieving sustained high economic growth and poverty reduction through improvements in revenue mobilization, public financial management, promotion of private investment and financial intermediation. Notwithstanding delays in implementing some structural reforms (e.g., clearance of audited arrears, and use of land as a collateral for bank loans), progress under the PRGF has been satisfactory.

Creditor Participation: The completion point was reached in November 2001. HIPC relief amounted to 1.4 percent of GDP in 2001/02 and is expected to account for 1.3 percent of GDP in 2002/03. Tanzania has received financing assurances from creditors holding around 90 percent of total debt, with the exception of non-Paris Club creditors. Specifically, it has received assistance from IDA, the IMF (which together account for more than 40 percent), Paris Club creditors (accounting for another 40 percent), the AfDB (6 percent), and other multilateral creditors (4 percent). Among the non-Paris Club creditors contacted by the authorities, only Kuwait has confirmed relief on HIPC terms.

Uganda

PRSP Status: The full PRSP was completed in March 2000, followed by two progress reports on the implementation of the PRSP so far. The incidence of poverty fell from 56 percent in 1992 to 35 percent in 2000. The PRSP is scheduled to be revised in 2003/04. In 2001, social spending relative to GDP was 8 percent compared to debt service-to-GDP ratio of 1 percent.

Policy Performance: A new PRGF arrangement for the period 2002/03-2004/05 of SDR 13.5 million (7.5 percent of quota) was approved by the Fund’s Executive Board in September 2002, focusing on economic growth and poverty reduction. The program supports a broad range of structural reforms to increase investor confidence and savings, an increase in government revenues through tax measures and administration, the curtailing of nonessential expenditures to assure adequate funding of anti-poverty programs and programs which support economic growth, further reforms in the financial sector and strengthening of accountability at the local level. Uganda’s macroeconomic performance has been broadly satisfactory. The Bank’s Executive Board approved the second annual Poverty Reduction Support Credit in July 2002. The Second Poverty Reduction Support Credit, like the first, supports a broad program of policy and institutional reform to improve service delivery and enhance agricultural production. A Third Poverty Reduction Support Credit is under preparation. The implementation of the reform program has been satisfactory.

Creditor Participation: The enhanced HIPC completion point was reached in May 2000. Required HIPC relief is US$630 million. Thirty of the 44 creditors have agreed to provide HIPC relief equivalent to 96 percent of the total required. Of the six commercial creditors, only one has agreed to provide relief. Several creditors (Iraq and commercial creditors from Spain, the United Kingdom, and Yugoslavia) have initiated court suits to get full repayment. So far, in the three cases of commercial creditors, the courts have decided in favor of the plaintiffs. The OPEC Fund, India, Libya and South Korea have agreed in principle to provide relief, but legal agreements have not been signed. The East African Development Bank, PTA Bank, Shelter Afrique, Burundi, Iraq, Nigeria, North Korea, Pakistan, and United Arab Emirates have yet to agree to provide relief.

1

Completion point for Mali was approved by Executive Boards of the World Bank and IMF on March 6, 2003.

2

See “Modifications to the Heavily Indebted Poor Countries (HIPC) Initiative”, EBS/99/139, July 23, 1999, http://www.imf.org/external/hp, and DC/99-25, September 17th, 1999, http://www.worldbank.org/hipc.

3

Benin, Cameroon, Chad, Gambia, The, Ghana, Guinea, Guinea-Bissau, Guyana, Madagascar, Malawi, Rwanda, São Tomé and Príncipe, and Senegal.

4

Chad, Madagascar, Cameroon, Guinea-Bissau, São Tomé and Príncipe, Ghana, and Sierra Leone.

5

Guinea and Guinea-Bissau.

6

The underlying assumptions and caveats on the updated costing are detailed in Annex I.

7

Since September, cost estimates were revised to reflect new estimates for Mali and the Democratic Republic of Congo and 2002 NPV terms. See “Heavily Indebted Poor Countries Initiative—Progress in Implementation”, SM/02/264 Revision 1, September 23, 2002, http://www.imf.org/external/hp, and http://www.worldbank.org/hipc.

8

The costs of HIPC assistance are calculated in NPV terms at the time of decision point. This cost has then been increased each year after the decision point year by a factor which is estimated as the average interest rate applicable for relief to be committed. This rate was estimated as 6.0 percent for the years, 2000 and 2001, respectively. In the costing exercise for end-2002, this factor was adjusted from 6.0 percent to 5.45 percent for 2000 and 2001 and a 5.45 percent rate was applied to increase costs from end-2001 to end-2002.

9

The potential costs of topping up were estimated as a range between US$0.4–0.7 billion in the September Status of Implementation Report.

10

See “Enhanced HIPC Initiative—Creditor Participation Issues”, SM/03/82, February 28, 2003, http://www.imf.org/external/hp; and February 28, 2003, IDA/SECM20030092, http://www.worldbank.org/hipc.

11

This includes costs under the original HIPC framework.

12

This includes costs under the original HIPC framework.

13

No relief has been provided to São Tomé and Príncipe, which had no outstanding obligations to the IMF at the decision point, and Nicaragua, which has experienced track record interruptions in its PRGF arrangement. The release of the topping up amount for Burkina Faso is subject to satisfactory financing assurances.

14

This figure is based on the net present value of the assistance at the time of decision point for each country.

15

The currency composition of the SDR was used as a proxy of the currency composition of the assistance under the HIPC Initiative.

1

Angola, Kenya, Vietnam, and Yemen.

2

The IMF cannot provide financial and technical assistance to Somalia until the government is recognized by the international community. Nevertheless, it continues to monitor developments through the UNDP/World Bank Post-Conflict Fund Watching Brief.

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