Three countries approved for enhanced HIPC

• Pages: 49-56

Page 49

Bolivia, Mauritania, and Uganda have become the first three countries to receive debt-service relief under the enhanced Heavily Indebted Poor Countries’ (HIPC) Initiative, the IMF and the International Development Association (IDA) have announced. Relief for Bolivia and Uganda will amount to $1.3 billion each and for Mauritania, to $1.1 billion. The enhanced assistance will be provided after the three countries, in concert with civil society, adopt strategies to reduce poverty and will help finance social expenditures.

The press release announcing the assistance for Bolivia notes that this country’s macroeconomic performance has improved dramatically over the past decade, with inflation declining from hyperinflationary levels to 3.1 percent in 1999 and official international reserves and foreign direct investment increasing significantly. In addition, the external debt burden, although still high, has eased considerably. Despite these improvements, about 70 percent of Bolivia’s population continues to live in poverty.

Uganda became eligible for debt relief under the enhanced initiative through the effectiveness of its poverty reduction strategy thus far and the authorities’ sustained commitment to macroeconomic stability. Although one of the poorest countries in the world, Uganda reduced its incidence of poverty by 18 percent between 1992/93 and 1996/97. It also increased the net primary school enrollment rate to 94 percent in 1998/99 from 56 percent in 1995/96. The assistance under the enhanced HIPC Initiative is expected to reduce Uganda’s external debt and debt-service burden by $50 million a year over the next 26 years.Page 56 Mauritania, according to the IMF press release, “has established a good track record of adjustment and reform on the macroeconomic, social, and political fronts.” The country has implemented structural reforms and achieved fiscal consolidation and, as a result, GDP has grown by about 5 percent a year since 1992, and social indicators have improved significantly. However, 50 percent of the population remains under the poverty line. The assistance to Mauritania represents debt-service savings of about $36 million a year over the next 10 years, or about 40 percent of total yearly debt-service obligations, the press release states.

Also in February, the IMF approved a three-year Extended Fund Facility arrangement in the amount of SDR 3.6 billion (about $5 billion) to support Indonesia’s economic and...