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Debt Relief Plan for the Poorest Countries Moves Ahead

Press Release No:97/1175

Contacts : Jacob Kolster (33) 01 40 69 30 13
Raymond Toye (33) 01 40 69 30 28

PARIS, November 15, 1996—Representatives of the major industrialized countries and multilateral institutions met yesterday in Paris to discuss work underway on the next steps in the implementation of the Heavily Indebted Poor Countries’ (HIPC) debt initiative including the new HIPC Trust Fund.

The HIPC debt initiative was agreed by governments around the world meeting in Washington at the end of September. It enables poor countries with good policy performance to escape from unsustainable debt and focus their energies on sustainable development and reducing poverty.

The HIPC Trust Fund was formally set up by the World Bank's Board of Executive Directors on Thursday, November 7th. It is one of the key elements in the implementation of the HIPC debt initiative and will provide debt relief to eligible HIPCs on debt owed to participating multilateral development institutions.

Participants heard a report on the setting up of the Trust Fund, which will be administered by the International Development Association (IDA), the part of the World Bank that provides highly concessional loans to the poorest countries, and discussed the next steps envisaged for the Trust Fund’s full operation. The World Bank has set aside $500 million as an initial contribution to the Trust Fund to meet its share of the debt relief needed.

At the end of the meeting Sven Sandstrom, Managing Director, World Bank, said: "This meeting has provided an important opportunity to reach a shared understanding of how all the parties involved are going to proceed quickly, in a collaborative manner, to implement this joint effort and ensure that countries gain access to the benefits of the initiative as soon as possible."

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