In 1996, the World Bank and the International Monetary Fund (IMF) launched the Debt Initiative for Heavily Indebted Poor Countries (HIPC) Initiative, which created a framework for all creditors, including multilateral creditors, to provide debt relief to the world's poorest and most heavily indebted countries, and thereby reduce the constraint on economic growth and poverty reduction imposed by the debt build-up in these countries. The HIPC Initiative was designed as one important building block in a broader development architecture of policies, programs and institutional development in support of sustainable growth and poverty reduction. The Initiative was modified in 1999 to provide three key enhancements:
- Deeper and Broader Relief. External debt thresholds were lowered from the original framework. As a result, more countries have become eligible for debt relief and some countries became eligible for greater relief.
- Faster Relief. A number of creditors began to provide interim debt relief immediately at the decision point. Also, the new framework permitted countries to reach the completion point faster.
- Stronger Link Between Debt Relief and Poverty Reduction. Freed resources were to be used to support poverty reduction strategies through Poverty Reduction Strategy Papers, which are developed by national governments in consultation with civil society.