Press Release: Mali to Receive US$250 Million in Debt Relief
September 16, 1998
The World Bank and the International Monetary Fund today agreed to provide Mali a total of US$250 million in nominal debt service relief under the Heavily Indebted Poor Countries (HIPC) Initiative. The Bank's contribution to this relief amounts to US$95 million with the IMF providing about US$18 million, and the remainder being provided by other multilateral and bilateral creditors. In terms of the net present value of assistance to be provided at the completion point in December 1999, HIPC assistance for Mali will be US$128 million. The stock of debt in NPV terms will be reduced to a target of 200 percent of exports, which implies a reduction of 10 percent.
This assistance would be additional to the debt relief provided by bilateral creditors under traditional debt relief mechanisms. It will provide Mali with further relief on its external debt burden and reduce the strain on national budgetary resources, thus freeing up resources to help accelerate structural reforms and finance needed social programs.
Since 1987, Mali has implemented a wide range of social, economic and political reforms which have transformed it from a mainly state-controlled to an increasingly market-based economy. Mali's annual GDP growth has averaged about 5 percent for the past three years, and the average yearly rate of inflation has dropped from a post-devaluation level of about 25 percent in 1994 to about zero in 1997, well below the Government target of 3.5 percent.
Mali has qualified for this assistance because it has met all the eligibility criteria under the Initiative: (i) it is an International Development Association (IDA) and Enhanced Structural Adjustment Facility (ESAF)-eligible country; (ii) it has demonstrated a sustained track record of strong adjustment under Bank- and Fund-supported programs (having received a stock of debt reduction on Naples terms from Paris Club creditors in May 1996); and (iii) it faces an unsustainable debt burden.
The HIPC debt relief committed now by the Bank and Fund will be delivered at a completion point in December 1999, based on Mali’s continued good progress in implementing its macroeconomic and structural reform program, and subject to assurances from Mali’s other creditors that they will also provide the necessary assistance. Mali is expected to make substantial progress in the areas of health, education, and poverty reduction. The social development agenda is broad, and includes, among other goals, an increase in the share of publicexpenditure allocated to primary health and education, an increase in the child immunization rate (from 40 percent in 1997 to 70 percent in 1999) and an increase in the primary school enrollment rate.
The structural measures will include specific agreed actions with regard to the privatization of public enterprises and reform of utilities, the deepening of financial intermediation, the reform of the civil service to ensure an effective deployment of human resources and improved delivery of services, the expansion of the role of the private sector in the economy, and the strengthening of competitiveness and productivity in rural areas particularly in the cotton sector.
The HIPC Initiative was approved in September 1996 as a means of dealing comprehensively with the debt burdens of the world's poorest countries. Mali is the seventh country to qualify for assistance under the Initiative after Uganda, Burkina Faso, Bolivia, Guyana, Côte d'Ivoire, and Mozambique. Total debt relief for all seven countries is expected to amount to almost US$6 billion in nominal terms.