Heavily Indebted Poor Countries initiative (HIPC)

Launched by the World Bank and the International Monetary Fund (IMF) in 1996, the Heavily Indebted Poor Countries initiative was designed to reduce unpayable debts.

Thousands marched at the G8 summit in Birmingham in 1998 to make sure debt was central to the agenda and shortly after in 1999 the initiative was enhanced to expand the eligibility and quicken the reforms. To qualify, countries must;

• be eligible to borrow money from the World Bank’s International Development Agency, in other words borrowing at low rates
• face an unsustainable debt burden (set criteria being the debt to exports ratio > 150%, debt to revenue ratio > 250%, exports to GDP ratio < 30%)
• have established a record of reform and policies through IMF and WB supported programmes
• have developed a Poverty Reduction Strategy Paper (PRSP)

To reach completion point countries must;

• establish further track record of good performance under programmes supported by loans from the IMF and World Bank
• implement key reforms
• adopt and implement a PRSP for at least one year

35 countries have reached completion point leading to approximately US$76 billion of debt relief overall. The post-completion countries are:

In addition to the 35 countries who have reached completion point, four countries have entered into the programme and are yet to complete the initiative. Chad is currently undertaking the steps necessary to reach completion point whilst Eritrea, Somalia and Sudan are waiting for the IMF to reach a decision about their eligibility. Somalia and Sudan’s qualification has been delayed as a result of missing repayments which have to be paid before receipt of debt relief.

More information:

• Multilateral Debt Relief Initiative (MDRI)
• Assessing the initiative
• Discussion points