Heavily Indebted Poor Countries Initiative and Multilateral Debt Relief Initiative - Statistical Update
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International Monetary Fund
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Publication Date:
04 Nov 2013
eISBN:
9781498342032
Language:
English
Keywords:
PP; IMF HIPC Initiative; MDRI-type; dollar; Point HIPCs; MDRI status of implementation report
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This report provides an update on the status of implementation of the HIPC Initiative and the MDRI over the past year. Given that most HIPCs have reached the completion point, in November 2011, the IMF and IDA Boards2 endorsed staff’s proposal to further streamline reporting of progress under the HIPC Initiative and MDRI. It was agreed that the annual HIPC Initiative/MDRI status of implementation report will be discontinued, while the core information—on debt service and poverty reducing expenditure, the cost of debt relief, creditor participation rates, and litigation against HIPCs—should continue to be made available and updated regularly on the IMF and World Bank websites.

Abstract

This report provides an update on the status of implementation of the HIPC Initiative and the MDRI over the past year. Given that most HIPCs have reached the completion point, in November 2011, the IMF and IDA Boards2 endorsed staff’s proposal to further streamline reporting of progress under the HIPC Initiative and MDRI. It was agreed that the annual HIPC Initiative/MDRI status of implementation report will be discontinued, while the core information—on debt service and poverty reducing expenditure, the cost of debt relief, creditor participation rates, and litigation against HIPCs—should continue to be made available and updated regularly on the IMF and World Bank websites.

Introduction1

  • This report provides an update on the status of implementation of the HIPC Initiative and the MDRI over the past year. Given that most HIPCs have reached the completion point, in November 2011, the IMF and IDA Boards2 endorsed staff’s proposal to further streamline reporting of progress under the HIPC Initiative and MDRI. It was agreed that the annual HIPC Initiative/MDRI status of implementation report will be discontinued, while the core information—on debt service and poverty reducing expenditure, the cost of debt relief, creditor participation rates, and litigation against HIPCs—should continue to be made available and updated regularly on the IMF and World Bank websites.

  • Against this background, this report provides an update to the progress made in the last year and the overall progress under the Initiative to date. In particular, the following figures and tables are updated:

Table 2.

HIPC Initiative: Costs by Main Creditor and Country Group

(In billions of U.S. dollars, in end-2011 PV terms, unless otherwise indicated)

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Sources: Country authorities, and World Bank and IMF staff estimates.

Total costs as reported in Table 2 of "HIPC Initiative and MDRI: Status of Implementation, November 2011", discounted to end-2011 terms.

Since November 2011, Comoros, Cote d’Ivoire and Guinea reached the completion point.

Table 3.

MDRI: Nominal Costs by Main Creditor and Country Group

(In billions of U.S. dollars)

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Sources: Country authorities, and World Bank, IMF, AfDB and IaDB staff estimates.

These countries have qualified for MDRI relief. Figures are based on actual disbursements and commitments.

Estimates are preliminary and subject to various assumptions, including the timing of HIPC decision and completion points, and, where applicable, of arrears clearance.

The estimated costs for IMF reflect the stock of debt eligible for MDRI relief, which is the debt outstanding (principal only) as of end-2004 and that has not been repaid by the member and is not covered by HIPC assistance (http://www.imf.org/external/np/pp/eng/2005/111605.htm); including the cost of the MDRI-type, beyond-HIPC debt relief.

IMF MDRI assistance to Cambodia and Tajikistan.

Table 4.

HIPC Initiative and MDRI: Committed Debt Relief and Outlook 1/

Status as of end-December 2012 (In millions of U.S. dollars)

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Sources : HIPC documents, and World Bank and IMF staff estimates.

Committed debt relief under the as sumption of full participation of creditors.

Nominal MDRI costs include principal and interest foregone for all multilaterals participating in the Initiative, except IMF, which only include principal. The estimated costs for IMF reflect the stock of debt eligible for MDRI relief, which is the debt outstanding (principal only) as of end-2004 and that has not been repaid by the member and is not covered by HIPC assistance (http://www.imf.org/external/np/pp/eng/2005/111605.htm).

Topping-up assistance and assistance provided under the original HIPC Initiative are expressed in PV-terms as of the time of the decision point.

No totals are shown because the amounts are in different PVterms (according to the date of the decision point).

Also reached completion point under the original HIPC Initiative. The assistance includes original debt relief.

Assistance includes topping up at completion point.

IMF MDRI debt relief to Cambodia and Tajikistan.

Liberia received MDRI-type (beyond-HIPC) debt relief at end-June 2010, which was financed from the Liberia Administered Account.

Table 14.

HIPC Initiative: Cost Estimates to Non-Paris Club Official Bilateral Creditors by Creditor Country 1/

(In millions of U.S. dollars, in end-2011 PV terms)

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Sources: HIPC Country Documents; IMF staff estimates.

Non-Paris Club creditors include those creditors that did not indicate their intention to participate in the Paris Club meeting at the time the completion point document for a particular country was being prepared. Thus, the claims of some creditors that are not permanent members of the Club, but were invited by the Paris Club to participate in the completion point debt negotiation for a given country and signed the Paris Club Agreed Minutes at the end ofthis negotiation, are not considered in here.

Listed as Yugoslavia in decision point documents.

Excludes claims held by the Ceskoslovenska Obchodni Banka on Mozambique at the time of decision point.

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

Table 15.

Delivery of HIPC Initiative debt Relief by Non-Paris Club Official Bilateral Creditors 1/2/

(in millions of U.S. dollars, 2011 PV terms unless otherwise indicated)

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Sources: HIPC documents; country authorities; and Fund and Bank staff estimates.

Based on information received as of December 2012. The information covers only creditors that have claims on post-completion-point countries. The information presented in the table is now based only on responses received from the IMF country team with consultations from the authorities. Creditors are not going to be surveyed which is a change in methodology compared to the previous status reports monitoring relief from the non-Paris creditors.

Argentina, Brazil, the Republic of Korea, Kuwait, Mexico, Morocco, Portugal, South Africa, and Trinidad and Tobago are associated members of the Paris Club. As such, these countries participate in negotiation sessions of the Paris Club on a case-by-case basis, provided that certain conditions are met. Generally, creditors participating in a negotiation session for a particular country are considered Paris Club members for the purpose of HIPC calculations.

In these cases, debtors have indicated that some relief has been provided but the information received is insufficient to

Partition of HIPC loans outstanding at decision point and the associated debt relief among members of the Former Yugoslavia is being determined with the help of the authorities.

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

In June 2003, India announced its intention to write off all non-export credit claims on HIPCs. However, several agreements remain unsigned.

The details for the debt relief provided are now available to be able to better estimate the effort by these creditors.

Table 16.

Commercial Creditor Lawsuits against HIPCs 1/

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Source: Country Authorities and IMF Staff

Commercial creditors lawsuits against HIPCs are reported without assessing the merits of these disputes. The information reported in this table reflects responses by the authorities, and it should not be considered a

Either original creditor or holder of current claim

“Judgment awarded” refers to cases in which the creditor has obtained a judgement against the HIPC but has not yet recovered the full payment on its claim Settled refers to cases where the judgement has been awarded and both parties have been settled on their claims.

Exchange rates at decision-point were used for reporting claims in U.S. dollars (else average exchange rates are used).

Excludes accumulated interest, charges, and penalties.

Amount could include interest, charges, and penalties.

Originally a loan fromCzechoslovakia assumed by the Czech Republic and subsequently assigned to a private party in Germany. Claims have been dismissed.

Judgement has been appealed. Approximate amount in USD, amount reported EUR 167 million (exchange rate used USD/EUR 1.32 for 2011).

There was a consent judgement between the creditor and the government of Zambia. Due to this negotiation, the outstanding debt is US$ 27 million. Zambian authorities are following a agreed payment schedule which isincluded in the budget.

Progress in the Implementation of the Initiative

(Table 1)

  • Three countries – Comoros, Cote d’Ivoire and Guinea –reached HIPC Initiative’s completion point in 2012. Chad is the only country in the interim phase between the decision and completion points. (Table 1)

  • The HIPC Initiative is nearly completed. Out of the 39 countries that have been assessed eligible or potentially eligible under the Initiative, 35 have already reached the completion point. Three pre-decision point countries - Eritrea, Somalia, and Sudan - are yet to start the process of qualifying for debt relief under the Initiative.3

  • Chad is the only country in the interim phase of the HIPC Initiative. Progress toward meeting several HIPC triggers, including health, infrastructure, and rural development has been weak. The key trigger still to be achieved is good macroeconomic performance under a formal Fund financing arrangement. Strong evidence of a one year satisfactory implementation of the PRS (Poverty Reduction Strategy) is also required for Chad to reach the completion point.

  • Eritrea has benefitted from the development of mining activity and the production of gold since 2011 but its political situation remains fragile. The last Article IV Consultation for Eritrea took place in 2009 and there are no discussions on a Fund-supported program.

  • Somalia has had virtually no engagement with international financial organizations for over twenty years4 due to the absence of a government recognized by the Fund or the Bank5 highly uncertain political and security situation, and the lack of economic and financial information. Nevertheless, the Bank held a discussion with the donor community in Somalia (November 2012) on preliminary steps toward ensuring that the building blocks are in place for assisting Somalia in normalizing relationship with its creditors, and re-engage with the international community when the political conditions enable action on this front. There has been no recent PRSP in either country and no work ongoing towards its preparation.

  • Sudan has made good progress towards the technical work required to advance towards the decision point of the HIPC Initiative and has reconciled over 90 percent of the end-2010 external debt stock in collaboration with creditors. The Sudanese parliament has also approved an ambitious interim-PRSP in June 2012.6 As of end-2012 Sudan still remains in arrears to the Fund and the World Bank.7

  • Myanmar’s potential eligibility under the HIPC could not be assessed in 2006 and 2011 because of lack of data. Recently, Myanmar has reached an agreement with Fund staff on a 12-month Staff Monitored Program (SMP) for 2013 to support its reform effort. This agreement paved the way for Myanmar to clear its external arrears vis-à-vis its Paris Club creditors, as well as the World Bank8 and the Asian Development Bank.

  • Zimbabwe remains in debt distress and will need a comprehensive arrears clearance framework with the international community.9 In 2001, Zimbabwe was removed from the IMF’s list of PRGT (Poverty Reduction and Growth Trust) eligible countries due to the arrears to the PRGT. Zimbabwe has made three payments to the PRGT in 2012, totaling US$ 7.5 million; as of end-December 2012, its arrears to the Fund amounted to US$ 127 million and to the Bank US$ 986 million. For the Fund, should Zimbabwe’s PRGT-eligibility be re-instated, it could be added to the list of countries potentially eligible for HIPC Initiative assistance (if the assessment against the indebtedness criterion were to be confirmed). On the Bank side, a modification of, or exception to, IDA's HIPC Initiative potential eligibility criteria would be required.10

Table 1.

List of Heavily Indebted Poor Countries

(As of end-December 2012)

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Countries that have qualified for irrevocable debt relief under the HIPC Initiative.

Countries that have reached decision point under the HIPC Initiative, but have not yet reached completion point.

Countries that are leigible or potentially eligible and may wish to avail themselves of the HIPC Initiative or MDRI.

Debt Service Relief and Poverty Reducing Expenditure

(Figure 1, Annex I Table 3 and Annex III Tables 1; 2 and 3)

  • Debt relief under the initiatives has substantially alleviated debt burdens in recipient countries and enabled them to increase their poverty reducing expenditure (Figure 1 and Annex III Table 1).

  • Progress in reaching the MDGs has been uneven. Assessment of progress might be better if those countries that have been assessed as having an insufficient data are making good progress toward achieving the MDGs. (Annex I Table 3).

Figure 1.
Figure 1.

Average Poverty Reducing Expenditure and Debt Service in HIPCs 1

Citation: Policy Papers 2013, 086; 10.5089/9781498342032.007.A001

Sources: HIPC documents and IMF staff estimates.1 For detailed country data and projections, refer to Appendix III Table 2 and 3.
Table 3.

HIPC Completion-Point Countries: Progress towards Achieving the MDGs

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Assessment of the Indicator including the assessment methodology remain unchanged from the previous year's reporting. No new data are available. Due to a change in the methodology, the ratings in 2012 are not comparable to those for 2011. At the current rate of progress, if a country is expected to achieve the target between 2016 and 2020, it is rated as being “ON TRACK.” Countries that are not expected to achieve the target by 2020 are rated as being “SERIOUSLY OFF TRACK.” A country is assigned a rating only if there is data for at least two observations. The first observation should be for a year after 2002, and the most recent observation should be in the last 5 year period.
Table 1

Summary of Debt Service and Poverty Reducing Expenditures 2001-2017 1

(In millions of U.S. dollars, unless otherwise indicated)

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Sources : HIPC countiy documents, and World Bank and IMF staff estimates.

Data refer to 36 post-decision-point HIPCs, unless specified otherwise.

Debt service paid covers 2001-2011, and debt service due covers 2012-2017. For post-completion point HIPCs, debt service due reflects the negotiated relief by the debtor countries, additional debt relief, provided by some Paris Club Creditors on a voluntary basis, and MDRI (countries that have reached the completition point in the more recent years, debt service projections assume full HIPC Initiative debt relief along with additional debt relief by the Paris Club and MDRI). For pre-completion-point countries, debt service due includes interimdebt relief and full HIPC Initiative and MDRI assistance expected at the projected completion point. See AppendixTable 2 for a detailed breakdown.

As defined in PRSPs; excludes data for years in countries for which data is not available. See AppendixTable 3 for a country breakdown.

Table 2

Debt Service of 36 Post-Decision-Point HIPCs, 2001-2017

(In millions of U.S. dollars, unless otherwise indicated)

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Sources: HIPC country documents, and World Bank and IMF staff estimates. Note: Data corresponding to years of decision and completion points under the enhanced HIPC Initiative are in thin and thick boxes, respectively.

Debt service paid covers 2001-2011, and debt service due covers 2012-2017. For post-completion point HIPCs, debt service due reflects the negotiated relief by the debtor countries, additional debt relief, provid by some Paris Club Creditors on a voluntary basis, and MDRI (for countries that have reached the completition point in the more recentyears, debt service projections assume full HIPC Initiative debt relief along wit additional debt relief by the Paris Club and MDRI). For pre-completion-point countries, debt service due includes interim debt relief and full HIPC Initiative and MDRI assistance expected at the projected completion

Data reported on a fiscal year basis.

Reached decision point in 2000.

Reached completion point in 2000.

Table 3.

Poverty-Reducing Expenditure of 36 Post-Decision-Point HIPCs 2001-2017 1/

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Sources: HIPC country documents, and World Bankand IMF staff estimates. Note:Data corresponding to years of decision and completion points underthe enhanced HIPC Initiative are in thin and thickboxes, respectively.

The coverage ofpoveity-reducing expenditures varies across countries, but is generally consistent with the definition in the PRSPand the budget of each HIPC. In some countries, the definition ofpoverty-reducing expenditures has evolved overtime to include more sectors; therefore, some of the increase in such spending over the 2001-2003 period may reflect changes in the definition. In the majority of countries expenditures on health and education are included but beyond that there are wide variations in the sectoral spending included.

Centralgovemment revenue excluding grants.

Currently fiscal data reported by authorities does not allowmonitoring ofpoverty reduction expenditures.

Reached decision point in 2000.

Reached completion point in 2000.

Data reported on a fiscal year basis.

Update of the Costs of the Initiatives

(Tables 2 and 3)

  • The total cost of HIPC Initiative debt relief to creditors is estimated at US$76 billion in end-2011 present value (PV) terms (Table 2). These costs are broadly unchanged compared to the previous estimates in 2011.11 Changes reflect small revisions of data for the three new HIPC completion point cases and a lower discount rate.12

  • The total cost of the MDRI for the four participating multilateral creditors is estimated at US$36.9 billion in end-2011 PV terms (Table 3, Annex III Table 4).

Creditor Participation: Multilateral Creditors

(Annex III Tables 5, 6A, 6B, 7A, 7B, 8A, 8B, 9 and 10)

  • Over ninety-nine percent of multilateral creditors, estimated by their share in the total cost of HIPC debt relief among multilateral creditors, have committed to participate in the HIPC Initiative (Table 5). A number of multilateral creditors receive support from the Debt Relief Trust Fund (DRTF), administered by IDA, to fulfill the provision of committed debt relief.13 As of end-December 2012, donors have contributed a total of US$6.6 billion to the DRTF. (Annex III Table 10).14 The DRTF has accumulated investment income amounting to US$599 million and has disbursed about US$6.7 billion. The remaining amount of resources available in the DRTF (US$0.5 billion) including the amount of unpaid pledges15 is estimated to be sufficient to help finance the expected completion point debt relief costs to eligible creditors in respect to the Democratic Republic of Congo16 and the pre-completion point HIPCs.17

Table 5.

HIPC Initiative: Cost Estimates to Multilateral Creditors and Status of their Commitments to Post-Completion-Point HIPCs Status as of end December 2012

(In millions of U.S. dollars, in end-2011 PV terms)

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Sources: HIPC documents, country authorities, and World Bank and IMF staff estimates.
Table 6A.

Status of Delivery of HIPC Initiative and MDRI Assistance by the World Bank Status as of end-December 2012

(In millions of U.S. dollars)

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Sources: HIPC documents, and World Bank staff estimates.

Total delivered HIPC assistance to end-2011.

Nominal MDRI costs include principal and interest foregone.

The total amounts shown are only indicative, as they represent the sum of individual commitments expressed in different PV terms, corresponding to the time of the decision point of each HIPC.

Also reached completion point under the original HIPC Initiative. The assistance includes original debt relief.

The assistance includes topping-up at completion point.

Table 6B.

World Bank Group Debt Service after HIPC Initiative and MDRI Debt Relief, 2000-2017

(In millions of U.S. dollars)

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

From 2001 to 2011, information corresponds to debt service actually paid to the World Bank. Debt service projections from 2012 onwards are based on stocks as of end-December 2011.

Debt Service before HIPC Initiative Debt Relief includes accumulated arrears for Central African Republic - USD 65.9 mil, Democratic Republic of Congo -USD 328.6 mil., Côte d’Ivoire -USD 256.9 mil., Haiti-USD 52.3 mil, Liberia - USD 366.9 mil., and Togo - USD 98.0 mil.

Table 7A.

Implementation of the HIPC Initiative and MDRI by the IMF

(In millions of SDRs; as of end-December 2012)

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Source: International Monetary Fund.

Includes interest on amounts committed under the enhanced HIPC Initiative.

Excludes remaining HIPC Initiative assistance delivered.

Includes commitment under the original HIPC Initiative.

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. Debt relief of SDR 17 million, committed to Côte d’Ivoire under the original HIPC Initiative, was therefore not delivered.

Haiti received from the Post-Catastrophe Debt Relief Trust SDR 178 million on July 21, 2010.

Liberia received MDRI-type (beyond-HIPC) debt relief at end-June 2010, which was financed from the Liberia Administered Account.

Table 7B.

IMF HIPC Initiative and MDRI Debt Relief, 1998-2012 1/

(In millions of US dollars; as of end-December 2012)

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Source: International Monetary Fund.

The figures in this table were converted from SDR amounts using annual average US$/SDR exchange rates for the HIPC disbursements and the exchange rate on the date of delivery of final debt relief disbursement.

Includes also interest earned both on the commitment amount in PRG-HIPC Trust and on the amount in HIPC Umbrella Account.

Haiti also received from the Post-Catastrophe Debt Relief Trust SDR 178 million on July 21, 2010.

Liberia received MDRI-type (beyond-HIPC) debt relief at end-June 2010, which was financed from the Liberia Administered Account.

Table 8A.

Status of Delivery of HIPC Initiative and MDRI Assistance by the African Development Bank (AfDB) Group Status as of end-December 2012 (In millions of U.S. dollars)

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Sources: African Development Bank Group, World Bank and IMF staff estimates.

Total delivered enhanced HIPC assistance to end 2011.

Nominal MDRI costs include principal and interest foregone.

Includes only HIPCs that owe debt to AfDB Group.

The total amount of HIPC Initiative debt relief has been provided through an arrears clearance operation in Congo, Rep. of in 2004; Côte d’Ivoire in 2009; Liberia in 2007; Togo in 2008.

Table 8B.

AfDB Group Debt Service after HIPC Initiative and MDRI Debt Relief, 2000-2015

(In millions of U.S. dollars)

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Sources: African Development Bank Group.

The total amount of HIPC Initiative debt relief has been provided through arrears clearance operation.

Debt service after HIPC for interimHIPC countries assumes that interim debt relief is provided according to the schedule determined at decision point.

Table 9.

Status of Delivery of HIPC and IaDB-07 Initiatives Assistance by the Inter-American Development Bank (IaDB) Status as of end-December 2012 (In millions of U.S. dollars)

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Sources: Inter-American Development Bank, World Bank and IMF staff estimates.

Total delivered enhanced HIPC assistance to end 2011.

Nominal IaDB-07 Initiative costs include principal and interest foregone.

Includes only HIPCs that owe debt to IaDB.

Table 10.

Status of Donor Contributions to the Debt Relief Trust Fund (In millions of U.S. dollars, as of end-December 2012)

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Includes contributions earmarked for IDA under IDA 14th, 15th and 16th Replenishments. IDA Replenishment contributions that have not been converted into U.S. dollars are reported at the market rates of exchange prevailing at the end of the reporting period.

Includes investment income allocations made towards IDA for debt relief to Haiti.

Includes investment income allocations made towards IFAD for debt relief to Haiti.

Includes the allocation in the amount of US$ 43 million towards IMF for debt relief to Uganda.

Does not include pledges that have not been paid-in.

The total available balance does not include an amount of approximately US$ 2 million of investment income accumulated in disbursing accounts.

Creditor Participation: Official Bilateral and Commercial Creditors

(Annex III Tables 11, 12, 13, 14, 15 and 16)

  • Paris Club creditors have committed to provide debt relief estimated at US$21.8 billion in 2011 PV terms to the 36 countries that have reached their decision points (Tables 11 and 12). Most members of the Paris Club have also voluntarily committed to provide additional debt relief beyond that required under the HIPC Initiative (Tables 12 and 13).

  • The share of debt relief attributable to the non-Paris Club official bilateral creditors is estimated at US$5.0 billion (2011 PV terms – Tables 14 and 15). So far, close to 50 percent of the debt relief has been delivered. Securing the participation of non-Paris Club official bilateral and private commercial creditors has been a challenge since the inception of the HIPC Initiative. Close to one third of the 55 non-Paris Club creditors reportedly have not participated in the HIPC initiative. Staffs of the World Bank and the IMF have continued to rely on the use of moral suasion and on the efforts by the HIPCs themselves to increase the participation of these creditors. (Table 15).

Table 11.

HIPC Initiative: Cost Estimates to Paris Club Official Bilateral Creditors by Creditor Country 1/

(In millions of U.S. dollars, in end-2011 PV terms)

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

Creditor invited on a case-by-case basis to participate in some Paris Club agreements.

Not a Paris Club member.In some cases, IDA-administered European Economic Commission (EEC) loans (which are treated as Paris Club debt) are apportioned among EECmembers. Amounts listed forLuxembourg correspond to its portion ofsuch EEC loans.

Table 12.

Debt Relief Committed and Delivered by the Paris Club Official Bilateral Creditors (In millions of U.S. dollars, in end-2011 PV terms)

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

Agreements with Portugal and Japan are still pending.

No information is available regarding the provision of interim debt relief to these countries by the Paris Club creditors.

Comoros’ negotiations with the Paris Club are scheduled for end-February 2013.

Table 13.

Paris Club Official Bilateral Creditors’ Delivery of Debt Relief under Bilateral Initiatives beyond the HIPC Initiative 1/

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Columns (1) to (7) describe the additionaldebt relief provided following a specific methodology underbilateralinitiatives and need to be read as a whole for each creditor. In column (1), "HIPCs" stands for eligible countries effectively qualifying forthe HIPCprocess. A "100 percent" mention in the table indicates that the debt relief provided under the enhanced HIPC Initiative framework will be topped up to 100 percent through a bilateral initiative.

Australia: Australia cancelled all HIPC claims.

Belgium: cancellation at completion point 100 percent of ODA loans contracted before December 31, 2000.

Denmark provides 100 percent cancellation of ODA loans and non-ODA credits contracted and disbursed before September 27, 1999.

France: cancellation of 100 percent of debt service on pre-cutoff date commercial claims on the government as they fall due starting at decision point. Once countries have reached completion point, debt relief on ODA claims on the government will go to a special account and willbe used forspecific development projects.

Finland: no post-Cutoff date claims

If not treated in the Agreed Minutes at Completion Point, debt cancellation of 100 % only on a case by case basis.

Italy: cancellation of 100 percent of all debts (pre- and post-cutoff date, ODA and non-ODA) incurred before June 20,1999 (the Cologne Summit). At decision point, cancellation of accrued arrears and maturities falling due in the interimperiod. At completion point, cancellation of the stock of remaining debt.

The Netherlands: 100 percent ODA (pre- and post-cutoff date debt will be cancelled at decision point); for non-ODA: in some particular cases (Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Mali, Mozambique, Nicaragua, Rwanda, Tanzania, Uganda and Zambia), the Netherlands will write off 100 percent of the consolidated amounts on the flowat decision point; allother HIPCs will receive interimrelief up to 90percent reduction of the consolidated amounts. At completion point, all HIPCs will receive 100 per cent cancellation of the remaining stock of the pre-cutoff date debt.

Norway has cancelled all ODA claims.

Due to the current World Bank/IMF methodology for recalculating debt reduction needs at HIPC completion point, Norway has postponed the decisions on whether or not to grant 100% debt reduction until after HIPCs’ completion point.

Russia has no ODA claims

Spain provides 100 percent cancellation of ODA and non-ODA claims contracted before January 1, 2004

Sweden has no ODA claims.

Switzerland has cancelled all ODA claims.

Switzerland usually writes off 100 percent of government-owned claims of the remaining debt stock at Completion Point and provides at least full HIPC debt relief of claims held by the ECA (100% cancellation of all remaining claims with the exception of Honduras and Cameroon).

United Kingdom: "beyond 100 percent" full write-off of all debts of HIPCs as of their decision points, and reimbursement at decision point of any debt service paid before the decision point.

United States: cancellation of 100 percent of all debts (pre- and post-cutoff date, ODA and non-ODA) incurred before June 20, 1999 (the Cologne Summit). At decision point, cancellation of accrued arrears and maturities falling due in the interimperiod. At completion point, cancellation of the stock of remaining eligible debt.

100% debt relief provides for countries reached Completion Point before December 31, 2006 as of December 21, 2006 and for countries reached Completion Point after December 31, 2006 as of date of Completion Point. No payments are expected from debtors from those dates.

Exception is short term debt category

Annex I. Country Status under the Enhanced HIPC Initiative

Table 1.

HIPC Pre-Decision Point Countries

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Table 2A.

HIPC Decision-Point Countries: Status of Completion Point Triggers

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Table 2B.

HIPC Decision-Point Countries: Summary by Country

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Annex II. Country Coverage, Data Sources, and Assumptions for the HIPC Initiative and MDRI Costing Exercise

Country Coverage

  • The costing analysis for the 36 post-decision-point countries includes: Afghanistan, Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Cote d’Ivoire, Comoros, Democratic Republic of the Congo, Republic of Congo, Ethiopia, The Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Haiti, Honduras, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, São Tomé and Príncipe, Senegal, Sierra Leone, Tanzania, Togo, Uganda, and Zambia.

  • The costing analysis for the pre-decision-point countries is based on 3 HIPCs: Eritrea, Somalia, and Sudan

Data Sources

  • Staff estimates are based on HIPC Initiative decision and completion-point documents for all 36 post-decision-point countries or estimates presented in Heavily Indebted Poor Countries (HIPC Initiative) - List of Ring-Fenced Countries that Meet the Income and Indebtedness Criteria at end-2004 for the 3 pre-decision-point HIPCs.

  • Data was updated through end-December 2012.

Assumptions for the HIPC Initiative and MDRI Costing Exercise

  • Calculations of total costs include costs under the original and enhanced HIPC Initiative frameworks and the MDRI.

  • Cost estimates for the HIPC Initiative are based on debt data after full use of traditional debt-relief mechanisms.

  • The following exchange rates have been used for the MDRI calculations:

  • - IDA and AfDF. The initial MDRI Trust Fund replenishment rate of 1.477380 US dollars per SDR was applied for the period FY07- FY08. Cost estimates for FY09-FY11 (corresponding to the period covered by the IDA 15 replenishment round) are based on the IDA15 foreign exchange reference rate of 1.524480 US dollars per SDR. Cost estimates for FY11 onward are based on the IDA16 foreign exchange reference rate of 1.50233 U.S. dollars per SDR.

  • - IMF. The exchange rate of the date that debt relief was delivered, and, in cases where debt was not yet delivered, the rate as of end-December 2011 was used.

  • - IaDB. Currency units in US dollars at end-2006.

Update of Cost Estimates in Present Value Terms

  • The cost of HIPC Initiative assistance calculated in PV terms at the time of the decision- point is discounted to end-2011 using the average interest rate applicable to the debt relief. This rate was estimated at 3.37 percent and corresponds to the implicit long-term interest rate of currencies that comprise the SDR basket over the period 2009-2011, calculated as a 6-month average of the Commercial Interest Reference Rate (CIRR) over this period, weighted by the participation of the currencies in the SDR basket. The same rate was used to calculate MDRI debt relief in end-2011 PV terms.

ANNEX III. Tables
1

Statistical update was prepared by Jayendu De and Yan Sun-Wang under the supervision of Laurence Allain, and Said Bakhache (IMF), Signe Zeikate under the supervision of Sudarshan Gooptu (WB).

2

Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI)—Status of Implementation and Proposals for the Future of the HIPC Initiative; IMF Policy Paper; November 8, 2011

3

Kyrgyz Republic, Bhutan, and Lao P.D.R did not meet the indebtedness criterion at end-2010 and were excluded from the list of HIPC eligible countries in 2011, while Nepal still remains potentially eligible. Nepal later indicated that it did not wish to avail itself of assistance under the Initiative.

4

The last Article IV was conducted in 1990.

5

For the Bank the assessment that the new government could become a “government in power” for the purposes of OP2.30 is still pending.

6

Sudan Staff Report for the 2012 Article IV Consultation available at: http://www.imf.org/external/pubs/cat/longres.aspx?sk=40081.0

7

As of end-2012 arrears to the Fund and World Bank are US$1515.9 million and US$710 million respectively.

8

On January 22, 2013, the World Bank Board of Directors approved a US$440 million Reengagement and Reform Support Credit to Myanmar. The Credit supports critical reforms being implemented by the Government to strengthen macroeconomic stability, improve public financial management and improve the investment climate. Its proceeds will also help the Government meet its foreign exchange needs, including repaying a bridge loan provided to it by the Japan Bank for International Cooperation (JBIC) to clear arrears.

9

Zimbabwe Staff Report for the 2012 Article IV Consultation available at: http://www.imf.org/external/pubs/cat/longres.aspx?sk=40026.0

10

For the World Bank, the HIPC Initiative income criterion is bound by the end-2004 cutoff, i.e., any change in a country’s IDA status post-2004 is not a relevant consideration. Percentage of GDP is not a relevant consideration

11

See last report as indicated in footnote 2.

12

See Annex II for assumptions on the discount rate used to ca lculate the PV of debt relief under the HIPC Initiative and the MDRI.

13

Eligible creditors include: AfDB, BOAD, CABEI, CDB, CMCF, EADB, FONPLATA, IaDB, IBRD, IFAD, IDA and NDF.

14

Annex Table 10 excludes contributions from AfDB, which are non-cash transactions.

15

This amount excludes US$98 million requested by the AfDB for post completion point debt relief to the Republic of Guinea. An amount of unpaid pledges totals US$98 million and includes US$23 million from Germany and US$75 million from the United States.

16

The Democratic Republic of Congo (DRC) reached the completion point in June 2010. DRTF provided AfDB a debt relief grant of US$425 million to support AfDB's provision of debt relief to DRC at completion point. However, the current low interest rate environment and AfDB’s subsequent lower than estimated income from the investment of the completion point grant proceeds are expected to lead to a financing gap of US$114 million that would not allow AfDB to reach its full share of the debt relief to DRC.

17

Future debt relief costs are based on current estimates of completion point dates, debt outstanding, as well as assumptions regarding the applicable discount rates. These estimates do not take into consideration possible additional debt relief costs to currently eligible HIPCs due to potential slippages in completion point dates or other factors, as well as granting of debt relief to countries such as Myanmar, the potential eligibility of which could not be assessed because of lack of data, or Zimbabwe, which currently does not meet the HIPC Initiative eligibility criteria.

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Cover Policy Papers
Heavily Indebted Poor Countries Initiative and Multilateral Debt Relief Initiative - Statistical Update
Author:
International Monetary Fund
Volume/Issue:
Volume 2013: Issue 086
Publisher:
International Monetary Fund
ISBN:
9781498342032
ISSN:
2663-3493
Pages:
45
DOI:
https://doi.org/10.5089/9781498342032.007
  • Figure 1.
    View in gallery
    Figure 1.

    Average Poverty Reducing Expenditure and Debt Service in HIPCs 1

Figure 1.

Average Poverty Reducing Expenditure and Debt Service in HIPCs 1