| HIPC Countries | Completion Point
(14 Countries) To reach completion point, countries must maintain macroeconomic stability under a Poverty Reduction and Growth Facility (PRGF)-supported program, carry out key structural and social reforms, and implement a Poverty Reduction Strategy (PRSP) satisfactorily for one year. Debt relief is then provided irrevocably by the country's creditors. | Benin | | Mauritania | | Bolivia | Mozambique | | Burkina Faso | Niger | | Ethiopia | Nicaragua | Ghana | Senegal | | Guyana | Tanzania | | Mali | Uganda |
Decision Point
(14 countries) To reach decision point, countries should have a track record of macroeconomic stability, have prepared an Interim Poverty Reduction Strategy through a participatory process, and cleared any outstanding arrears. The amount of debt relief necessary to bring countries’ debt indicators to HIPC thresholds is calculated, and countries begin receiving debt relief on a provisional basis. | Cameroon | | Madagascar | | Chad | Malawi | | Congo, Dem. Rep. | Rwanda | | Gambia, The | São Tomé & Príncipé | | Guinea | Sierra Leone | | Guinea-Bissau | Zambia | | Honduras | |
Pre-Decision Point
(11 countries) | Burundi | | Liberia | | Central African Republic | Myanmar | | Comoros | Somalia | | Congo, Rep of | Sudan | | Cóte d'Ivoire | Togo | | LAO PDR | |
Dowload Aligning the PRGF to the PRSP (PDF) Dowload HIPC at a Glance (PDF) |
September 20, 2004—To date, 27 countries have qualified for debt relief of more than $54 billion under the Heavily Indebted Poor Countries (HIPC) Initiative. Providing debt relief to 11 remaining countries who have yet to qualify for HIPC is looming as a major challenge as the deadline for the entry into the program approaches. These countries: Cote d'Ivoire, Burundi, Central African Republic, Comoros, Republic of Congo, Lao PDR, Liberia, Myanmar, Somalia, Sudan and Togo have typically suffered from conflict and weak government institutions. HIPC: Progress So Far
The 27 countries that already qualified under the HIPC Initiative will receive about $54 billion in debt relief over time. This translates to their debt being cut, on average, by two-thirds through an "unprecedented" effort of donors and creditors including, for the first time, the multilateral creditors. The World Bank's contribution will be about $13 billion over time. Debt service to exporr ratios also have been substantially reduced to an average of 10 percent. A key element of the HIPC Initiative was to redirect the funds that would have been used for debt service into poverty reduction programs such as education and health care. In African countries receiving debt relief under the initiative, poverty reduction spending has increased from 38.6 percent of government revenue in 1999 to 48.1 percent in 2001. Of the 27 countries who have been accepted into the initial phase of the program, 14 have satisfied all required actions to reach the completion point when the debt relief becomes irrevocable. Most recently Niger, Ethiopia and Senegal were awarded irrevocable debt relief status. How HIPC Works
The HIPC Initiative, first conceived by the Bank and Fund in 1996 and enhanced in 1999, offered a chance at debt relief to 38 low income countries - 32 of them in Sub-Saharan Africa - by cutting their debt payment obligations to a "manageable level". Funds freed up by debt relief were to be used for poverty reduction programs rather than repayments. The scheme requires countries to demonstrate a good track record of economic management measures such as economic stabilization programs, public sector reforms, and reorientation of public spending toward poverty reduction, health, education, and pro-poor growth - before they are accepted for debt relief. When countries meet these obligations they are referred to as reaching their decision point and they are granted interim debt relief. At the decision point, the HIPC governments pledge to introduce a series of key reforms. These normally include sound macro-economic policies and measures that would help to achieve tangible reductions in poverty levels. Countries must prepare Poverty Reduction Strategy Papers - a process involving wide-ranging consultations with community groups and NGO and donor groups on future priorities for public policy targeted for poverty reduction - and implement the poverty reduction strategy satisfactorily for a year. A stable macro-economic environment underpins the growth-friendly reforms undertaken in such areas as the creation of a sound legal system, establishment of a reliable and accountable financial system, and the fostering of a self-sustaining private sector development. Detailed plans are formulated to improve the access and quality of public services and to improve the quality of life of the poor. Debt relief becomes irrevocable at the end of the HIPC Initiative process, known as the completion point. To reach this point, countries must have satisfactorily finished the reforms they agreed to when they entered the formal HIPC Initiative process. Countries which have reached their completion point under the HIPC initiative
Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Mali, Mauritania, Mozambique, Nicaragua, Niger, Senegal, Tanzania, Uganda. Countries which have reached their decision point under the HIPC initiative
Cameroon, Chad, Democratic Republic of Congo, Gambia, Guinea, Guinea-Bissau, Honduras, Madagascar, Malawi, Rwanda, Sao Tome and Principle, Sierra Leone, Zambia. More on Debt Sustainability
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