Twenty-two poorest countries qualify for debt relief under joint IMF-World Bank HIPC Initiative

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Acrucial milestone in providing relief to thepoorest countries was reached when IMF Managing Director Horst Köhler and World Bank President James D.Wolfensohn announced that 22 eligible countries (18 of them in Africa) had qualified for debt relief under the Heavily Indebted Poor Countries (HIPCs) Initiative.

This means these countries begin to be spared some $34 billion in debt-service obligations.Once they reach their completion points under the initiative, these countries will see their foreign debt reduced by two-thirds on average, reflecting relief under traditional mechanisms, the HIPC Initiative, and additional bilateral actions.

In their December 22 joint statement, Köhler and Wolfensohn said:

"In this millennium year, the Bretton Woods institutions have been determined to play their part in tackling one of the most pressing challenges of our time-helping the poorest members of the world community to share in the prosperity enjoyed by so many. A key element has been debt relief for the heavily indebted poor countries.

"In 1996, the IMF and the World Bank launched an initiative with many other partners to reduce the debt of the HIPCs toPage 2sustainable levels as a way to renew their prospects for growth and to free up resources for vital social needs. Last year, we committed to strengthen that initiative to provide faster, deeper, and broader debt relief.When progress still seemed too slow, we pledged to make every effort to permit at least 20 countries to benefit from debt relief by the end of this year. This goal has been reached and even exceeded.

"In recent weeks, our Executive Boards and staffs have worked intensively to finalize debt relief for many HIPCs. These efforts will lift some $34 billion in debtservice obligations from the shoulders of 22 eligible countries, 18 of them in Africa (see charts, pages 3 and 4, and table, page 5).As a result, after they reach their completion point and receive full assistance under the enhanced HIPC Initiative, these countries will see their foreign debt reduced by almost half on average.

Combined with existing debt-relief programs-such as those of the Paris Club of creditor nations-these countries will see their debts fall, on average, by about two-thirds.

"Much hard work and commitment has been required. The countries concerned have shown their willingness to put debt relief to effective use to improve the lives of the poor. They have formulated strategies to reduce poverty, to...