Initiative for Heavily Indebted Poor Countries - Statistical Update
Author: International Monetary Fund
Publication Date:
04 Nov 2005
eISBN:
9781498331593
Language:
English
Keywords:
PP; annual debt service; country; HIPC country document; center; GDP; HIPC assistance; HIPC relief; near-term debt-service payment; NPV terms; IDA grant
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Initiative for Heavily Indebted Poor Countries - Statistical Update

Abstract

Initiative for Heavily Indebted Poor Countries - Statistical Update

I. Guide to the Tables

1. This document updates the information provided in the September 2004 Status of Implementation Report for the Heavily Indebted Poor Countries (HIPC) Initiative.1 Below are some highlights drawn from the accompanying tables.

A. Progress in Implementation

(Table 1)

Table 1.

HIPC Initiative: Committed Debt Relief and Outlook 1/ Status as of mid-March 2005

(In millions of US dollars, in NPV terms in the year of the decision point)

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

Committed debt relief under the assumption of full participation of creditors.

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

Côte d'Ivoire reached its decision point under the original-HIPC Initiative in 1998, but did not reach its completion point under the original-HIPC Initiative, nor did it reach the decision point under the enhanced HIPC Initiative. The amounts of debt relief shown are only indicative of debt relief under the originial HIPC Initiative and are based on a preliminary document issued.

2. Since September 2004, Madagascar has reached the completion point (October 2004), increasing the number of countries that have reached their completion points to 15 as of end-February 2005. Debt relief of US$18.4 billion in decision point NPV terms is to be provided irrevocably to these countries, representing 57 percent of the HIPC assistance committed to the 27 countries that have reached their decision points.

3. While some progress towards reaching the completion point has been made since September 2004, maintaining macroeconomic stability remains a challenge for many of the 12 countries that are currently in the interim period between their decision and completion points.

  • Honduras, Rwanda, and Zambia are expected to reach their completion points in the second quarter of 2005.

  • The Democratic Republic of the Congo and Sierra Leone continue to make progress under their macroeconomic programs; however, security tensions in the Democratic Republic of the Congo led to fiscal pressures, complicating the implementation of policy. A new PRGF arrangement was approved for Chad in February 2005. In Malawi and São Tomé and Príncipe, work is underway to put in place macroeconomic adjustment and reform programs that could be supported by the IMF under the Poverty Reduction and Growth Facility (PRGF).

  • Other countries continue to experience difficulties. The Gambia, Cameroon and Guinea are taking steps to address problems in fiscal management and structural reforms in order to resume their PRGF-supported programs. Guinea-Bissau has been making efforts to restore growth and rehabilitate its public finances so as to pave the way for a possible IMF-supported program.

  • On the development and implementation of Poverty Reduction Strategy Papers (PRSPs), a requirement for reaching the completion point, Sierra Leone has completed its PRSP since September 2004. During this period, the first annual progress report on PRSP implementation for Guinea has been discussed by the IDA and IMF Boards, while the reports for Chad and The Gambia are expected to be discussed by the two Boards in the next few months. Only two countries (The Democratic Republic of the Congo and Guinea-Bissau) have yet to complete their PRSPs, but both are expected to do so later this year.

4. Of the remaining 11 HIPCs that have yet to reach their decision points, two are making significant progress in doing so, while for others, significant challenges remain. With progress made under their PRGF-supported programs, Burundi and the Republic of Congo are expected to reach their decision points in 2005.2 Lao PDR has also established a track record of macroeconomic performance under its PRGF-supported program, but the authorities have indicated that they do not intend to avail themselves of the HIPC Initiative. Many of the remaining pre-decision point countries have large arrears to various creditors and have been affected by conflict, which has complicated the design and implementation of viable policy adjustment and reform programs.

5. In September 2004, the IDA and IMF Boards agreed to extend the sunset clause under the enhanced HIPC Initiative by two years to end-2006 and to ring-fence its application to poor countries with unsustainable external debt based on end-2004 data. IDA and IMF staffs are working to collect the necessary data in order to identify the IDA-only, PRGF-eligible countries that had external public debt in excess of the HIPC thresholds after the assumed full application of traditional debt relief mechanisms at end-2004. Staffs are expected to report their preliminary findings to the two Boards at the time of the August 2005 HIPC Status of Implementation report. In order to qualify for HIPC debt relief, all identified countries will still need to have unsustainable external debt at the decision point and a track record of macroeconomic policy performance.

B. Summary of Costs

(Tables 2, 3)3

Table 2.

HIPC Initiative: Changes in the Estimates of Potential Costs by Creditor Group 1/

(In billions of U.S. dollars)

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Sources: HIPC Initiative country documents; and staff estimates.

All HIPCs, excluding potentially sustainable cases (Angola, Kenya, Vietnam, and Yemen).

Reflects updated DSAs for Madagascar, Burundi, Congo Rep., Lao P.D.R.

The discount rate used is the 3-year average SDR CIRR for 2001-2003, which was 4.8 percent

The discount rate used is the 3-year average SDR CIRR for 2002-2004, which was 4.6 percent.

For the IMF, no provision was made for Somalia, Liberia and Sudan in the resources mobilized for the PRGF-HIPC Trust in 1999. New grant resources will need to be mobilized to enable the Fund to provide HIPC Initiative assistance to these countries at an appropriate time.

Table 3.

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

(In billions of U.S. dollars, in 2004 NPV terms) 1/

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Sources: Country authorities; and staff estimates.

All HIPCs, excluding potentially sustainable cases (Angola, Kenya, Vietnam, and Yemen).

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, Democratic Republic of the Congo, 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, Côte d'Ivoire, Lao P.D.R, Liberia, Myanmar, Republic of Congo, Somalia, Sudan, and Togo.

For the IMF, no provision was made for Somalia, Liberia and Sudan in the resources mobilized for the PRGF-HIPC Trust in 1999.

New grant resources will need to be mobilized to enable the Fund to provide HIPC Initiative assistance to these countries at an appropriate time.

6. The total cost for the current 38 countries potentially eligible for debt relief under the HIPC Initiative is estimated to be US$55.6 billion in 2003 NPV terms – an increase of US$1.1 billion from US$54.5 billion reported in the September 2004 Status of Implementation Report (Table 2). The higher estimate reflects updated costs for Burundi, the Republic of Congo, and Madagascar, and the addition of data for Lao PDR, which was previously excluded from costing calculations due to data deficiencies. Converting the total amount to 2004 NPV terms, the estimate amounts to US$58 billion. Of this, the total cost for the 27 decision point countries is US$37.1 billion (Table 3), which is roughly equally divided between multilateral (51 percent) and bilateral (49 percent) creditors.

C. Creditor Participation: Multilateral Creditors

(Tables 4, 5A, 5B, 6A, 6B and 7)

Table 4.

HIPC Initiative: Estimates of Costs to Multilateral Creditors and Status of Their Commitments

(In millions of U.S. dollars, in 2004 NPV terms)

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Sources: 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 full participation in the enhanced HIPC Initiative. Moreover, for a few of these creditors, there have been significant delays in developing the modalities for the actual delivery of debt relief.

Table 5A.

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

(In millions of U.S. dollars, as of March 1, 2005)

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Sources: 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 loans; and ii) at the due date in the case of debt service reduction.

Figures are from the respective completion point documents, they include the reduction in interest payments associated with the cancellation of loans and the provision of grants instead loans. Assistance provided through the reduction of the debt service to IDA, unless otherwise indicated.

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

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

Assistance 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.

Includes topping-up assistance.

Assistance to be provided through: i) IDA grants which would be used to cover a percentage of IBRD debt service during the interim period (45 percent of IBRD debt service for Cameroon, 50 percent for Honduras); ii) an IDA credit to prepay all IBRD outstanding debt at the completion point; and iii) a reduction of IDA debt service.

Corresponds to the assistance provided through the reduction of debt service payments to IDA on the disbursed and outstanding debt as of end-2002, which would provide a relief of US$597 million in NPV terms. The remaining US$223 million in NPV terms needed to cover the World Bank share of assistance was provided through the clearance of arrears.

Table 5B.

HIPC Initiative: Estimated Delivery of World Bank Assistance, 2000-2009

(In millions of U.S. dollars)

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

From 2000 to 2004, information corresponds to debt service actually paid to the World Bank. Debt service after 2004 is based on stocks as of end-December 2004.

Debt service before the purchase of IDA credits.

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 and the enhanced decision points.

Corresponds to the assistance provided through the reduction of debt service payments to IDA on the disbursed and outstanding debt as of end-2002, including the assistance delivered through concessional financing of the bridge loan to clear arrears to

Figures from the Completion Point Document under the original HIPC Initiative.

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

Weighted by each country’s share in total debt service before HIPC.

From 2000 to 2004, figures correspond to actual debt relief received.

Table 6A.

HIPC Initiative: Status of Commitments by the IMF

(In millions of SDRs, as of March 15, 2005)

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Source: IMF Finance Department; also available at www.imf.org/external/fin.htm.

Includes interest on amounts committed under the Enhanced HIPC Initiative.

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

Amount committed is equivalent to the remaining balance of the total IMF HIPC assistance of SDR 337.9 million, after deducting SDR 109.6 million representing the concessional element associated with the disbursement of a PRGF loan following the DRC’s clearance of arrears to the IMF on June 12, 2002.

At the time of its decision point, São Tomé and Príncipe did not have any eligible debt to the IMF.

Table 6B.

HIPC Initiative: Estimated Delivery of IMF Assistance, 1998-2010 1/

(In millions of U.S. dollars, as of March 15, 2005)

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Sources: HIPC country documents and staff estimates.

Under the Original and Enhanced HIPC Initiatives.

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

The figures for 1998-2002 shown in the table represent actual payments made to the IMF, including the settlement of arrears on June 12, 2002.

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.