Amy Stilwell (202) 458-4906
WASHINGTON, June 29, 2006 - The World Bank announced today that the Multilateral Debt Relief Initiative (MDRI), which will cancel the International Development Association (IDA) debt of some of the world’s poorest countries, will take effect on July 1, 2006. Under the MDRI, IDA is expected to provide some US$37 billion in debt relief over 40 years. This is in addition to some US$17 billion of debt relief already committed by IDA under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative.
“We have secured a level of financing commitments from donors that allows us to begin implementing the Multilateral Debt Relief Initiative,” said World Bank President Paul Wolfowitz. “Additional debt relief will help these countries channel resources into programs that directly help the people who need it most — the poor who need and deserve a better education, better health services, greater access to clean water, and greater opportunities to escape poverty.”
Countries that have “graduated” from the HIPC Initiative are eligible for the additional debt relief. Initially, 19 countries will receive 100 percent cancellation of their eligible debt: Benin, Bolivia, Burkina Faso, Cameroon, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia. The remaining HIPC countries (see HIPC Web Site) will be eligible for debt cancellation once they have completed the requirements of the HIPC Initiative.
At the July 2005 G8 Summit in Gleneagles, Scotland, G8 leaders pledged to cancel the debt of the world’s most indebted countries, most of which are located in Africa. Debt cancellation will be provided by the International Development Association IDA of the World Bank, the International Monetary Fund and the African Development Fund to countries that have graduated (called reaching the “completion point”) from the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative.
In March 2006, donors agreed to a financing package for the MDRI that stipulates additional donor contributions over time to ensure delivery of fresh resources for poverty reduction. Compensatory financing over the duration of the cancelled loans will be based on strong commitments already made, and donors are undertaking further steps in their home countries to provide additional financing commitments over time.
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