The HIPC Initiative: Issues for Consideration April, 2006 Outline What is the HIPC Initiative? The Sunset Clause The HIPC Process from Decision to Completion Point MDRI Impact on Public Finances Main Considerations What is the HIPC Initiative?
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established jointly by the IMF and the World Bank in 1996 and enhanced in 1999.
Central African Rep.
Congo, Republic of
Sao Tome & Principe
Pre-HIPCHIPC Implementation to Date
38 Participating Countries
reform program and
PRSP or I-PRSP in place
Caveat: All figures are “back of the envelope” and intended for illustrative purposes only
Includes HIPC and MDRI relief. Red numbers are averages for the years concerned.
Direct, irrevocable debt service relief from multilateral, bilateral, and commercial creditors
MDRI: 100% debt cancellation from IDA and IMF
Debt relief creates fiscal space for social spending
Strong commitment to stabilization
Additional conditionality but most envisioned by the NPRS
Some bilateral creditors may scale back new assistance for a few years after they grant debt reliefMain Considerations