See The Multilateral Debt Relief Initiative (G-8 Proposal) and Its Implication for the Fund—Further Considerations (September 9, 2005 and November 1, 2005) and Multilateral Debt Relief Initiative and Exogenous Shocks Facility—Proposed Decision (November 16, 2005).
On the basis of the 2004 gross national income as calculated by the World Bank (Atlas method).
The consents of all contributors to the PRGF Trust Subsidy Account are required for the MDRI legal framework to become effective. Debt relief will only be provided to a qualifying member upon its request.
This group includes the three protracted arrears cases (Liberia, Somalia, and Sudan), as well as countries that may become eligible for the HIPC Initiative under the extended sunset clause (see Heavily Indebted Poor Countries Initiative—Status of Implementation, August 19, 2005).
Countries are expected to continue to service their obligations to the Fund while awaiting qualification for MDRI debt relief. These debt service payments will not be reimbursed when the country eventually qualifies for debt relief.
A similar approach was used for the enhancement of the HIPC Initiative. Countries that had already qualified for HIPC assistance under the original framework did not get additional debt relief automatically, but only after an assessment by the Fund of their adjustment and reform efforts and overall progress in poverty reduction.
Although the MDRI decisions and staff commentary do not specifically refer to policies meeting the standards of UCT conditionality in applying the test for satisfactory macroeconomic performance for all HIPCs, the UCT benchmark is implied by the link to completion of reviews for HIPCs with Fund arrangements and by the principle that the qualification criteria for HIPCs without Fund arrangements would be applied on comparable terms.
Given the time constraint, most of the additional analyses were desk-based.
Although a similar methodology was used, the HIPC AAPs were spread over a longer period of time and carried out in a more thorough fashion.
Burkina Faso, Cambodia, Ghana, Mali, Mozambique, Niger, Tajikistan, Tanzania and Uganda would qualify under the MDRI-I Trust; Benin, Bolivia, Guyana, Honduras and Zambia would qualify under the MDRI-II Trust.
The fifth review under the PRGF arrangement with Tajikistan was completed in July 2005 on a lapse-of-time basis. The sixth and final review under the arrangement is expected to be brought to the Board for discussion in January 2006. Tajikistan’s macroeconomic performance over the past three years has been satisfactory, as illustrated by the satisfactory implementation of its PRGF-supported program since December 2002.
In the case of Zambia, a review of financing assurances for the fourth disbursement under the PRGF arrangement was completed on October 18, 2005 on a lapse-of-time basis. At the time, it was concluded that macroeconomic performance had been satisfactory.
In the case of Cambodia and Tajikistan, implementation of their PRS has been satisfactory over the past recent years.
The staff proposal was not endorsed by the Board. Executive Directors considered that Ethiopia, Madagascar, Nicaragua, Rwanda, and Senegal meet all three qualification criteria for MDRI relief and expressed their preparedness to approve such relief for each of these countries once the general MDRI decisions are effective.
The Executive Board did not support this view. Executive Directors considered that Senegal meets all three qualification criteria for MDRI relief and expressed their preparedness to approve such relief for Senegal once the general MDRI decisions become effective.
Directors agreed that Mauritania did not meet the macroeconomic and PEM criteria. However, they indicated that the remedial actions in these areas should be a track record of sound macroeconomic policies over a period of six months, together with actions in the areas of budget formulation, execution, and reporting, and the resolution of data issues with the Fund.
This date would allow debt delivery to start in early 2006, just before the first 2006 repayment/repurchase falls due for any of these 20 countries.
The staff proposal was not endorsed by the Board. Executive Directors considered that Senegal meets all three qualification criteria for MDRI relief and expressed their preparedness to approve such relief for Senegal once the general MDRI decisions are effective.