Update--Financing the Fund's Participation in the HIPC Initiative and the Continuation of the Poverty Reduction and Growth Facility
April 20, 2001
Progress in Strengthening the Architecture
of the International Financial System
Report by the Acting Managing Director to the International
Monetary and Financial Committee—Financing the Fund's Participation in the HIPC
Initiative and the Continuation of the Poverty Reduction and Growth Facility|
April 14, 2000
1. This note provides an update on the status of contributions to the PRGF-HIPC Trust, which was reviewed by the Executive Board on March 27, 2000.1
2. The total cost to the Fund of participation in the HIPC Initiative and the continuation of the PRGF is estimated at SDR 3.9 billion on an "as needed" basis,2 with the HIPC Initiative accounting for about two-thirds of the total. These financing requirements are to be met by a combination of bilateral contributions amounting to SDR 1.5 billion and contributions by the Fund amounting to SDR 2.4 billion.
3. On December 8, 1999, the Executive Board took the decisions necessary to enable many bilateral contributors and the Fund to make their contributions to the PRGF-HIPC Trust, including the termination of the Second Special Contingent Account (SCA-2) and the decision to undertake off-market gold transactions of up to 14 million ounces. Since then, considerable progress has been made in securing the necessary financing. About 60 percent of pledged contributions have either been received or are being contributed on the basis of an agreed schedule. As to the Fund, the bulk of its contribution, SDR 1.8 billion, will come from the investment income on the profits generated from off-market sales of 12.9 million ounces of gold, which were completed in early April. The Fund will also provide SDR 0.6 billion from other sources, of which about 40 percent has already been contributed to the PRGF-HIPC Trust.
4. So far, the Executive Board has authorized the transfer of nine-fourteenths of the investment income on profits from gold sales to be used for the benefit of the HIPC Initiative. The transfer of the remaining five-fourteenths requires a decision by the Executive Board with an 85 percent majority. Further legislation by the United States Congress is necessary for the Executive Director of the United States to support such a decision. Without this investment income, there would be a shortfall in resources available for debt relief under the HIPC Initiative of about SDR 600 million, assuming that all pledged bilateral contributions are made available.
1See Financing the Fund's Participation in the HIPC Initiative and the Continuation of the PRGF: Update of Status of Contributions (EBS/00/49, 3/17/00) for further background.
2Unless otherwise indicated, all figures are presented in "as needed" terms. The term "as needed" refers to the nominal undiscounted sum of the assumed time profile of resources required by the PRGF-HIPC Trust for the delivery of HIPC assistance and subsidies related to interim PRGF lending. The value of a contribution in "as needed" terms is estimated taking into account the timing of its availability in relation to the timing of resource requirements of the PRGF-HIPC Trust. These estimates do not include possible use of PRGF resources or HIPC assistance by Liberia, Somalia, and Sudan.
|Pledged Bilateral Contributions to the PRGF-HIPC Trust by Country Group|
|(in millions of SDRs "as needed")1, 2|
|as of April 14, 2000|
|TOTAL (93 contributors)||1,562.9|
|Major industrial countries||880.5|
|Other advanced countries||299.9|
|Fuel exporting countries||88.3|
|Iran, Islamic Republic of||2.2|
|Trinidad and Tobago||1.6|
|United Arab Emirates||3.8|
|Other developing countries||175.0|
|Micronesia, F. S.||0.00001|
|St. Vincent and the Grenadines||0.1|
|Countries in transition||44.2|
|1 The term "as
needed" refers to the nominal undiscounted sum of the assumed time profile of resources
required by the PRGF-HIPC Trust for the delivery of HIPC assistance and subsidies related to
interim PRGF lending. The value of a contribution in "as needed" terms is estimated
taking into account the timing of its availability in relation to the timing of resource requirements
of the PRGF-HIPC Trust. All calculations are based on an SDR interest rate assumption of 5
percent per annum.|
2See the 1999 Annual Report, Appendix II, Table 10 for information on member countries' contributions to the Poverty Reduction and Growth Facility, previously known as the Enhanced Structural Adjustment Facility.
3Contribution to be confirmed or approved.