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:
15 Dec 2014
eISBN:
9781498342490
Language:
English
Keywords:
PP; country; IMF HIPC Initiative; Point HIPCs; HIPC assistance
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The HIPC Initiative and MDRI are nearly complete with 35 countries having already reached the completion point under the HIPC Initiative. One country, Chad, remains in the interim phase. Debt relief under the Initiatives has substantially alleviated debt burdens in recipient countries and has enabled them to increase their poverty-reducing expenditure by two and a half percentage points between 2001 and 2013. Creditor participation in the Initiative has been strong amongst the multilateral and Paris Club creditors; however participation from the other creditor groups still needs to be strengthened. The total cost of debt relief to creditors under the HIPC Initiative is currently estimated to be US$75.0 billion, while the costs to the four multilateral creditors providing relief under the MDRI is estimated to be US$41.1 billion in end-2013 present value terms.

Abstract

The HIPC Initiative and MDRI are nearly complete with 35 countries having already reached the completion point under the HIPC Initiative. One country, Chad, remains in the interim phase. Debt relief under the Initiatives has substantially alleviated debt burdens in recipient countries and has enabled them to increase their poverty-reducing expenditure by two and a half percentage points between 2001 and 2013. Creditor participation in the Initiative has been strong amongst the multilateral and Paris Club creditors; however participation from the other creditor groups still needs to be strengthened. The total cost of debt relief to creditors under the HIPC Initiative is currently estimated to be US$75.0 billion, while the costs to the four multilateral creditors providing relief under the MDRI is estimated to be US$41.1 billion in end-2013 present value terms.

Introduction

1. This report provides an update on the status of implementation of the HIPC Initiative and the MDRI and the cost estimates of these Initiatives’ in end-2013 present value (PV) terms.1 This report provides an update to the overall progress made 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-2013 PV terms, unless otherwise indicated)

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Total costs as reported in Table 2 of “HIPC Initiative and MDRI: Statistical Update”, December 2013, discounted to end-2013 terms.

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.

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

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

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 AIII15.

Delivery of HIPC Initiative debt Relief by Non-Paris Club Official Bilateral Creditors1/2/

(in millions of U.S. dollars, end-2013 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 August 2013. 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 quantify

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 AIII16.

Commercial Creditor Lawsuits against HIPCs1/

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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

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.

Excludes accumulated interest, charges, and penalties.

Amount could include interest, charges, and penalties.

Judgement has been appealed. Approximate amount in USD, amount reported EUR 167 million.

Approximate amount in USD, amount reported EUR 5 million. Excludes accumulated interest, charges, and penalties.

Approximate amount in US$ representing the equivalent of CFA 88,886 million (original claims) and CFA 109,784 million (claimed by creditor).

Progress in the Implementation of the HIPC/MDRI Initiative

2. The HIPC/MDRI Initiative is nearly complete. Out of the 39 countries that have been eligible under the Initiative, 35 have already reached the completion point. Three pre-decision-point countries—Eritrea, Somalia, and Sudan—have yet to start the process of qualifying for debt relief under the Initiative, while Chad remains in the interim phase. The assessment for qualification and eligibility for Myanmar and Zimbabwe is yet to be fully completed.2

Table 1.

List of Heavily Indebted Poor Countries (As of end-September 2014)

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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 eligible or potentially eligible and may wish to avail themselves of the HIPC Initiative and MDRI.

3. Chad. Chad is the only country in the interim phase of the HIPC Initiative. A three-year arrangement under the ECF for a total amount of about US$122.4 million, covering the period July 2014–June 2017, was approved on August 1, 2014. Satisfactory performance under the ECF is one of the prerequisites to achieve the HIPC completion point. A World Bank mission in May 2014 found that Chad had made good progress against the other HIPC completion-point triggers. The authorities have finalized the annual progress report on the implementation of the PRSP, for which a World Bank/IMF JSAN will be finalized by the end of 2014.

4. Eritrea. There have been no updates from the previous report in the case of Eritrea. As reported in the previous update, Eritrea has benefitted from the development of mining and the production of gold since 2011 and base metals since 2013, but its political situation remains fragile. The last Article IV Consultation for Eritrea took place in 2009 and there has been no discussion of an IMF-supported program.

5. Somalia. With the support of the Work Bank and the IMF, the External Debt Technical Working Group was established to tackle Somalia’s accumulated arrears and debt and to ensure that Somalia builds a credible track record of economic reforms needed for a SMP. Although Somalia is ineligible to receive financial assistance from the IMF or the Work Bank due to its longstanding arrears of about US$360 million and US$270 million respectively, both institutions have been providing technical assistance and capacity development in key areas of their expertise with the IMF support directed towards central banking, financial governance and the development of macroeconomic statistical data systems. Staff will work on collecting basic real, fiscal, monetary, and external sector data and establishing a macroeconomic and financial framework. This would allow staff to conduct Article IV consultation discussions that have been delayed since 1990, as well as prepare the groundwork for a SMP. In addition, the Work Bank is providing technical assistance to the senior staff of the Ministry of Finance on the full range of budget and policy management issues with the objectives of strengthening budget preparation, documentation, improving transparency and accountability in the mobilization and use of public resources and building capacity for improved public financial management. The AfDB is also supporting the newly created Debt Management Unit to increase staff capacity and to reconstruct the debt database in a computerized debt management system.

6. Sudan. Sudan remains in arrears to the IMF, the World Bank, and the AfDB. Its arrears stood at US$1,511.9 million to the IMF (as of July 18, 2014), US$806 million to IDA (as of July 21, 2014), and US$314 million to the AfDB (as of June 30, 2014). The authorities prepared and implemented a comprehensive reform package in September 2013 which had introduced new policy measures, including lifting of fuel subsidies and unifying the official and commercial exchange rates. On March 7, 2014 a new SMP for January-December 2014 was approved by the IMF. The performance under the SMP will aid the authorities to build a track record on cooperation with the IMF which should help in securing the necessary support for arrears clearance and debt relief in due time.

7. Myanmar. Myanmar has completed a 12-month Staff Monitored Program (SMP) ending in January 2014. The completion of this program enabled Myanmar to clear its external arrears vis-à-vis its Paris Club creditors, as well as the World Bank and the Asian Development Bank.

8. Zimbabwe. Zimbabwe remains in debt distress and will need a comprehensive arrears clearance framework with the international community.3 Zimbabwe’s eligibility to receive assistance under the HIPC Initiative remains unclear. The recent indebtedness assessments based on loan-by-loan reconciled debt data indicate that Zimbabwe has met the indebtedness criterion for eligibility under the HIPC Initiative. However, to be eligible for assistance, the country also needs to clear its arrears to the PRGT.4 On the Bank side, a modification of, or exception to, IDA’s HIPC Initiative income criteria would be required. To receive HIPC debt relief, Zimbabwe would also need to qualify for the Initiative. Qualification largely depends on the levels of debt vis-à-vis exports based on the latest fiscal year data, and on its policy performance. The recent assessment indicates that based on end-2013 debt-to-exports ratio, Zimbabwe would not qualify for the HIPC debt relief initiative. A Staff-Monitored Program (SMP) for Zimbabwe was approved in June 2013, its first IMF agreement in more than a decade. On October 29, 2014, the IMF Management completed the third review under the SMP and approved a successor SMP covering October 2014–December 2015. The main objectives of the new SMP are to strengthen Zimbabwe’s external position, as a prerequisite to arrears clearance and resumption of debt service; and to show that the country has the capacity to implement policy reforms that could justify a financial arrangement with the Fund.

Debt Service Relief and Poverty Reducing Expenditure

(Figure 1, Annex I Table AI3 and Annex III Tables AIII1–3)

Figure 1.
Figure 1.

Poverty-Reducing Expenditure and Debt Service in 36 Post-Decision-Point HIPCs, (in % of GDP)1

(indexed to 100 at completion point)

Citation: Policy Papers 2014, 089; 10.5089/9781498342490.007.A001

Sources: HIPC documents; World Bank and Fund staff estimates.1Due to data constraints t indicates completion point rather than decision point. As a result, the effect of debt relief may be underestimated since some debt relief may have occurred prior to completion point. For detailed country data and projections, refer to Appendix III Table 2 and 3.
Table AI3:

HIPC Completion-Point Countries: Progress towards Achieving the MDGs

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Due to a change in the methodology, the ratings in 2012 and in 2013 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 TARGET.” Countries that are not expected to achieve the target by 2020 are rated as being “SERIOUSLY OFF TARGET.” 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 AIII1.

Summary of Debt Service and Poverty Reducing Expenditures 2001–181

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

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

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

Debt service paid covers 2001-2013, and debt service due covers 2014-2018. 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 precompletion-point countries, debt service due includes interim debt relief and full HIPC Initiative and MDRI assistance expected at the projected completion point. See Appendix Table 2 for a detailed breakdown.

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

Table AIII2.

Debt Service of 36 Post-Decision-Point HIPCs, 2001–181

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

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Sources: HIPC country documents, and W orld Bank and IMF staff estimates. Note: Data corresponding to years ofdecision and completion points underthe enhanced HIPCInitiative are in thin and thickboxes, respectively.

Debtservicepaid covers 2001-2013, and debtservice due covers 2014-2018 Forpost-completion point HIPCs, debt service duereflects the negotiated reliefby the debtor countries , additional debt relief, provided by some Paris Club Creditors on a voluntary basis, and MDRI (for countries that have reached thecompletition pointin the more recentyears,debt service projections assume lull HIPCInitiative debt reliefalong with additional debtreliefby the Paris Club and MDRI). Forpre-completion-point countries, debt service due includes interimdebt relief and full HIPCInitiative and MDRI assistance expected at the projected completion point.

Data reported on a fiscalyearbasis.

Reached decision point prior 2000.

Reached completion point prior 2000.

Table AIII3.

Poverty-Reducing Expenditure of 36 Post-Decision-Point HIPCs 2001-18 1/2/

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Sources: HIPC countiy 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.

The coverage ofpoverty-reducing expenditures varies across countries,but is generally consistent with the definition in the PRSP and the budget ofeach HIPC. In some countries, the definition of poverty-reducing expenditures has evolved over time 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 sectoralspending included.

Centralgovernment revenue excluding grants.

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

Reached decision point prior 2000.

Reached completion point prior 2000.

9. Debt relief under the Initiatives has substantially alleviated debt burdens in recipient countries and has enabled them to increase their poverty-reducing expenditures (Figure 1 and Annex III Table AIII1). However, recent data indicate that the decline in debt service has moderated and the debt service burden may increase in the near future.

10. Despite the increase in poverty-reducing expenditures, the HIPCs are lagging behind on reaching the MDG targets in many areas. The MDG target year of 2015 is fast approaching, however many countries in Sub-Saharan Africa, including HIPCs are seriously off target to meet the MDGs. The lowest achievements have been reported in the education and health related sectors. So far no HIPC had met the MDG challenge in the areas of (i) reducing infant mortality rate and (ii) combating HIV/AIDS and other diseases. Rwanda is the only HIPC country that met the MDG in the area of reducing maternal mortality rate. HIPCs are performing relatively better in the areas of gender equality in primary education and access to safe drinking water. More than one third of the HIPCs have increased access to improved water services and have already met the MDG on gender equality in primary education. In addition, one fifth of HIPCs have reduced child mortality rates. Overall, there is a need to increase efforts and to accelerate progress in order to achieve most of the MDG targets by 2015.

Update of the Costs of the Initiatives

11. The total cost of debt relief to creditors under the HIPC Initiative is estimated at US$75 billion in end-2013 present value (PV) terms (Table 2). These costs are broadly unchanged compared to the previous estimates in end-2012 PV terms. Changes reflect small revisions to data and a lower discount rate.5

12. The total cost of the MDRI for the four participating multilateral creditors is estimated at US$41.1 billion in end-2013 PV terms (Table 3, Annex III Table AIII4).

Table AIII4.

HIPC Initiative and MDRI: Committed Debt Relief and Outlook1/ (In millions of U.S. dollars; status as of end-August 2014)

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

Committed debt relief under the assumption 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 (EBS/05/158 Revision 1, 12/15/2005).

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 PV terms (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.

Creditor Participation: Multilateral Creditors

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

Table AIII6A.

Status of Delivery of HIPC Initiative and MDRI Assistance by the World Bank

(In millions of U.S. dollars; status as of end-August 2014)

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Sources: HIPC documents, and World Bank staff estimates.

Total delivered HIPC assistance to end-2013.

Nominal MDRI costs include principal and interest foregone.

The total amounts shown are only indicative, as they represent the sumof 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 AIII6B.

World Bank Group Debt Service after HIPC and MDRI Debt Relief, 2000-18

(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 AIII7A.

Implementation of the HIPC Initiative and MDRI by the IMF (In millions of SDRs; status as of end-August 2014)

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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.

Afghanistan, Comoros, Haiti, and Togo did not have MDRI-eligible credit and did not receive MDRI debt relief from the IMF. Côte d’Ivoire and Guinea had fully repaid MDRI-eligible debt by completion point date.

Table AIII7B.

IMF HIPC Initiative and MDRI Debt Relief, 1998–20131 (In millions of US dollars; status as of end-August 2014)

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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 of SDR 116.2 million at end-June 2010 financed from the Liberia Administered Account; equivalent to US$171.9 million on June 30, 2010.

Table AIII8A.

Status of Delivery of HIPC Initiative and MDRI Assistance by the African Development Bank (AfDB) Group

(In millions of U.S. dollars; status as of end-August 2014)

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

Total delivered enhanced HIPC assistance to end 2013.

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 AIII8B.

AfDB Group Debt Service after HIPC Initiative and MDRI Debt Relief, 2000-18

(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 interim HIPC countries assumes that interim debt relief is provided according to the schedule determined at decision point.

Table AIII9.

Status of Delivery of HIPC and IaDB Initiatives Assistance by the Inter-American Development Bank (IaDB) (In millions of U.S. dollars; status as of end-August 2014)

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

Total delivered enhanced HIPC assistance to end 2013.

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

Includes only HIPCs that owe debt to IaDB.

Table AIII10.

Status of Donor Contributions to the Debt Relief Trust Fund (In millions of U.S. dollars, status as of end-August 2014)

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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 IDA for debt relief to the Palestinian Authority.

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

13. Over ninety-nine percent of multilateral creditors, estimated by their share in the total cost of HIPC debt relief to post-completion-point HIPCs, have committed to participate in the HIPC Initiative (Annex III, Table AIII5). 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.6 As of end-August 2014, donors have contributed a total of US$6.7 billion to the DRTF (See Annex III Table AIII10).7 The DRTF has accumulated investment income amounting to US$602 million and has disbursed about US$7.0 billion. The remaining amount of resources available in the DRTF (US$0.5 billion), including the amount of unpaid pledges is estimated to be sufficient to help finance the expected debt relief costs to eligible creditors in respect to completion point countries and the predecision point HIPCs.8, 9, 10

Table AIII5.

HIPC Initiative: Cost Estimates to Multilateral Creditors and Status of their Commitments to Post-Completion-Point HIPCs (In millions of U.S. dollars, in end-2013 PV terms; status as of end-August 2014)

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

Creditor Participation: Official Bilateral and Commercial Creditors

(see Annex III Tables AIII11–16)

Table AIII11.

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

(In millions of U.S. dollars, in end-2013 PV terms)

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Sources:HIPC country documents,World Bankand IMF staffestimates.

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 for Luxembourg comespond to its portion ofsuch EECloans.

Table AIII12.

Debt Relief Committed and Delivered by Paris Club Official Bilateral Creditors (In millions of U.S. dollars, in end-2013 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.

Table AIII13.

Paris Club Official Bilateral Creditors’ Delivery of Debt Relief under Bilateral Initiatives beyond the HIPC Initiative1/

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Source: Paris Club Secretariat.

Columns (1) to (7) describe the additional debt relief provided following a specific methodology under bilateral initiatives and need to be read as a whole for each creditor. In column (1), “HIPCs” stands for eligible countries effectively qualifying for the HIPC process. 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 will be used for specific 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 interim period. 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 flow at decision point; all other HIPCs will receive interim relief up to 90 percent 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 interim period. 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

Table AIII14.

HIPC Initiative: Cost Estimates to Non-Paris Club Official Bilateral Creditors by Creditor Country1/

(In millions of U.S. dollars, in end-2013 PV terms)

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Sources: HIPC Country Documents; IMF staffestimates.

Non-Paris Club creditors include those creditors that did not indicatetheirintentionto participatein the Paris Club meeting atthe timethe completion point document foraparticular country wasbeing prepared. Thus,the claims ofsome creditors that are not permanent memb ers ofthe Club, but were invited by Ihe Paris Club to p articip ateinthe completionpoint debt negotiation foragiven counity and signed the Pans Club AgreedMinutes atthe end ofthis negotiation, are not consideredmhere.

Listed as Yugoslavia in decision point documnts.

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.

14. Paris Club creditors have committed to provide debt relief estimated at US$21.5 billion in end-2013 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).

15. The share of debt relief attributable to the non-Paris Club official bilateral creditors is estimated at US$4.9 billion in end-2013 PV terms (Tables 14 and 15). So far, a little less than half of this expected 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. Approximately thirty percent of the non-Paris Club creditors are yet to participate in the HIPC Initiative. Staff 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).

Annex I. Country Status Under the Enhanced HIPC Initiative

Table AI1:

HIPC Pre-Decision Point Countries

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Table AI2A:

HIPC Decision-Point Countries: Status of Completion Point Triggers

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Table AI2B:

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

A. Country Coverage

  • The costing analysis for the 36 post-decision-point countries includes: Afghanistan, Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Côte 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.

B. 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-August 2014.

C. 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 debtrelief 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 2013 was used.

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

D. 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-2013 using the average interest rate applicable to the debt relief. This rate was estimated at 2.61 percent and corresponds to the implicit long-term interest rate of currencies that comprise the SDR basket over the period 2011–13, 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-2013 PV terms.
1

This is an update to the earlier report “Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI)—Statistical Update” December 19, 2013 that provides debt relief cost estimates in end 2012 PV terms. As agreed by the IMF and IDA Boards 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.

2

Nepal remains potentially eligible. For further discussion, see “Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI)—Status of Implementation and Proposals for the Future of the HIPC Initiative”; IDA/R2011–0310 and IMF Policy Paper; November 8, 2011.

3

Staff Report for the 2014 Article IV Consultation

4

Due to arrears to the Poverty Reduction and Growth Trust (PRGT), in 2001 Zimbabwe was removed from the IMF’s list of PRGT-eligible countries. Zimbabwe made payments to the PRGT in 2012 and 2013 totaling US$7.5 million and US$1.8 million, respectively. Payments in 2014 through end-October totaled US$1.7 million. As of end-October 2014, Zimbabwe’s arrears to the IMF and the Bank amounted to US$119 million and US$1,085 million, respectively.

5

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

6

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

7

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

8

An amount of unpaid pledges totals US$145 million and includes US$70 million from Germany and US$75 million from the United States.

9

Includes the Democratic Republic of Congo (DRC), Federal Democratic Republic of Ethiopia (Ethiopia) and Republic of Madagascar (Madagascar). 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. AfDB also requested additional resources of US$0.3 million to cover the shortage of funds to support the debt relief to Ethiopia and Madagascar, which reached the completion point in April 2004 and October 2004, respectively.

10

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 future additional debt relief to currently eligible HIPCs, additional relief due to potential slippages in completion point dates or other factors, including granting of debt relief to additional countries such as 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 2014: Issue 089
Publisher:
International Monetary Fund
ISBN:
9781498342490
ISSN:
2663-3493
Pages:
47
DOI:
https://doi.org/10.5089/9781498342490.007
  • Figure 1.
    View in gallery
    Figure 1.

    Poverty-Reducing Expenditure and Debt Service in 36 Post-Decision-Point HIPCs, (in % of GDP)1

    (indexed to 100 at completion point)

Figure 1.

Poverty-Reducing Expenditure and Debt Service in 36 Post-Decision-Point HIPCs, (in % of GDP)1

(indexed to 100 at completion point)