 | Complete Report[0.7 mb] English|Français |
| Foreword |
| Executive Summary- English|Español|Français |
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| Chapter 1: Introduction |
 | This review updates the 2003 independent evaluation of the HIPC initiative |
| HIPC’s objectives remain largely unchanged |
| Debt relief is becoming an ongoing mechanism for resource transfer |
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| Chapter 2: Delivery of Debt Relief |
| The HIPC initiative was innovative in its attempt to seek a comprehensive approach to debt reduction involving all creditors |
| The main architects of the initiative—the Bank, the Fund and the Paris Club—have committed their full share of relief. Low participation of non-Paris Club and commercial creditors has resulted in a shortfall of 8 percent of total HIPC assistance |
| HIPC has channeled additional development resources to qualifying countries both in the aggregate, and for 21 of 28 countries. Net transfers to HIPC countries have doubled since 1999 while transfers to other developing countries have grown by only one-third |
| In future debt relief efforts, donors will have to ensure that the resulting allocation of concessional resources rewards better performing countries overall |
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| Chapter 3: Prospects for Debt Sustainability |
| Current HIPC projections for growth and exports are more optimistic than even the high actual rates of recent years |
| HIPC has reduced debt ratios to half their levels before debt relief. But debt ratios have increased since completion point, and in eight countries ratios once again exceed HIPC thresholds |
| Six of eight post-completion-point countries with a new debt sustainability analysis have only a moderate risk of debt distress. But all eight remain vulnerable to export shocks and require highly concessional financing and prudent debt management |
| Debt reduction alone cannot ensure debt sustainability but has to be accompanied by other efforts to improve repayment capacity |
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| Chapter 4: Policy Performance and Poverty Reduction |
| Countries past completion point started out with higher scores on key policy ratings than other low-income countries and still score higher |
| Countries not yet at completion point have weak and declining governance and economic management indicators that will affect their prospects for benefiting from debt relief |
| All countries have weak and deteriorating debt management capacity and the Bank has provided HIPC countries with little assistance in improving debt management capacity |
| Efforts arising from HIPC to upgrade countries’ public expenditure management systems have resulted in only modest improvements |
| While post-completion point countries have made modest progress toward attaining the Millennium Development Goals, the data are still limited |
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| Chapter 5 Findings |
| The Enhanced HIPC initiative cut debt ratios in half for 18 countries, but in eight of these countries, the ratios have come to once again exceed HIPC thresholds. Debt reduction alone is not a sufficient instrument to affect debt sustainability, which also requires improvements in repayment capacity. |
| HIPC has channeled additional development resources to qualifying countries – these countries have received an increased share of overall aid transfers. Net transfers to HIPC countries have doubled from $8.8 billion in 1999 to $17.5 billion in 2004, while transfers to other developing countries have grown by only one-third. |
| Post-completion point countries started out with higher scores on key policy ratings than other low-income countries and they still score higher. HIPC countries that are not yet at completion point have on average the lowest ratings of all low-income countries. They face serious challenges in managing their economies, which will affect their prospects for reaping the potential benefits of debt reduction. |
| Six of eight post-completion-countries with new debt sustainability analyses have only a moderate risk of debt distress, but all remain vulnerable to export shocks and still require highly concessional financing and prudent debt management. |
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| | Appendixes: |
| Appendix A: A Guide to the HIPC Initiative |
| Appendix B: Extension of the Deadline for HIPC Eligibility, 1998-2004 |
| Appendix C: Country Groupings |
| Appendix D: Comparison of Economic Projections to Historical Trends |
| Appendix E: Debt Indicators and Sustainability Assessments in Eight Post-Completion-Point Countries |
| Appendix F: Countries with Macroeconomic Slippages or Delays Since Completion Point |
| Appendix G: Achievement and Waivers of Completion-Point Conditions |
| Appendix H: Measures of Policy Performance |
| Appendix I: Performance on Governance Indicators |
| Appendix J: Titles for Further Reading |
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| References |
| Endnotes |
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