Debt relief proposal means changes ahead in IMF work program

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IMF Executive Directors agreed on June 22 that the IMF's work program should be modified in light of the Group of Eight (G-8) proposal, announced on June 11, that the World Bank, IMF, and African Development Bank cancel their claims on 18 countries that have reached the completion point under the HIPC (Heavily Indebted Poor Countries) Initiative and other HIPC countries(currently 17) as they reach the completion point. The decision to revisit the IMF's work program came out of an initial Board discussion of the G-8 proposal, which focused partly on issues that will need to be addressed in analyzing the proposal.

The Executive Board asked staff to carefully assess the proposal, and its legal, financial, and policy implications for the IMF, as well as possible modifications. This assessment will be considered in the context of other proposals related to the IMF's involvement with low-income countries that are already on the Board's near-term discussion agenda. In the meantime, the IMF will continue to operate under existing policies and procedures until decisions to alter these policies are taken by the required majorities. That is, the IMF will make new commitments and disbursements under the Poverty Reduction and Growth Facility (PRGF) and the HIPC Initiative, and member countries will continue servicing, in full and on a timely basis, their financial obligations to the IMF and the PRGF trust.

Bilateral contributions from the G-8 countries (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United...