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Joint Session--IMFC and Development Committee On HIPC and PRSP Implementation|
September 24, 2000
1. Ministers of the Development Committee and the International Monetary and Financial Committee met jointly on September 24, 2000 to review progress on the enhanced Initiative for the Heavily Indebted Poor Countries (HIPC) and the Poverty Reduction Strategy Paper (PRSP) process. The joint meeting symbolizes the close cooperation and high political commitment of all countries and institutions to achieving a virtuous circle of debt relief, poverty reduction and economic growth for the poorest countries of the world.
2. Ministers believed that solid foundations have been laid for further progress in turning last year's blueprints into this year's reality. They agreed that since last year good momentum has developed in both the HIPC and PRSP programs and that real progress has been made towards broader, deeper and faster debt relief.
3. Ministers noted that ten countries have already reached their decision points under the enhanced HIPC Initiative and have begun to receive relief. They welcomed the determination of the President of the World Bank and the Managing Director of the Fund to do everything possible to bring twenty countries to their decision points by the end of 2000. This is expected to result in combined debt service relief (including original and enhanced HIPC assistance) amounting to well over $30 billion. Taken together with traditional debt relief mechanisms, a total of about $50 billion will be provided to these countries. They noted that interim assistance beginning at the decision point had accelerated the provision of relief, and that the incorporation of the floating completion point offers qualifying countries the opportunity to reduce significantly the period between decision and completion point. In addition, Ministers reaffirmed the objective of the enhanced HIPC Initiative to deliver debt sustainability and noted that, within the existing HIPC framework, the option exists at the completion point to reconsider the amount of debt relief for countries seriously affected by exceptional adverse shocks.
4. While it was recognized that implementation would ultimately be determined by country-specific factors, Ministers welcomed recent steps to accelerate progress. These include, in particular, closer working partnership between the Bank and Fund through active work of the Joint Implementation Committee (JIC); flexibility in assessing countries' track records, which should help to bring forward countries originally expected next year; and greater focus on key reforms to accelerate growth and poverty reduction. Consistent with the goal of broadening the initiative, Ministers supported the extension of the sunset clause for two more years to allow countries, particularly those emerging from conflict, time to enter the process. Ministers looked forward to consideration of Bank and Fund post-conflict work at the time of the Spring Meetings.
5. Ministers reiterated the importance of fully financing the enhanced HIPC Initiative, and urged all donors and creditors to meet their commitments of financial support.
6. Ministers recalled that a central component of the enhanced HIPC initiative is the strengthened link between debt relief and poverty reduction, to be made operational through country-owned PRSPs. They were encouraged that as many as 13 countries had already completed Interim PRSPs, and that two had already completed full PRSPs. They also noted that countries and their development partners had responded positively to both the promise and the challenge of the PRSP process, and were moving purposefully to put poverty at the center of nationally owned strategies. While reaffirming the principle of country ownership, Ministers urged all development partners to increase their efforts to provide additional technical assistance to support countries' preparation of PRSPs, which should provide the context for IMF and IDA concessional assistance as well as that of donors and other multilateral institutions. In this context they welcomed the Bank's proposal to develop a Poverty Reduction Support Credit and the key changes in the Fund's Poverty Reduction and Growth Facility - for example, the enhanced link to PRSPs, ensuring appropriate flexibility in fiscal targets and making budgets more pro-poor and pro-growth.
7. Ministers emphasized that the early progress achieved with the enhanced HIPC Initiative and PRSPs needed to be supported by a sustained global effort from eligible countries, development partners, bilateral donors, multilateral agencies, and international civil society in order to make best use of these new opportunities.
IMF EXTERNAL RELATIONS DEPARTMENT