## The Multilateral Debt Relief Initiative: A First Assessment of Eligible Countries—Supplemental Information

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### Purpose and scope
- Summarizes new information available to staff since The Multilateral Debt Relief Initiative: A First Assessment of Eligible Countries (December 8, 2005).
- Focuses on six members for which staff recommends remedial actions before the Board determines qualification for debt relief under the MDRI: Ethiopia, Madagascar, Mauritania, Nicaragua, Rwanda, and Senegal.
- Notes: The staff proposal was not endorsed by the Board. Executive Directors considered that Ethiopia, Madagascar, Nicaragua, Rwanda, and Senegal meet all three qualification criteria for MDRI relief and expressed their preparedness to approve such relief for each of these countries once the general MDRI decisions are effective.

### Overall staff assessment (paragraphs 1–2)
- Authorities in the six countries are already working on remedial measures.
- Country-specific status summary:
  - Nicaragua and Senegal: authorities expressed commitment to implement remedial measures that could allow qualification for MDRI relief in the coming weeks.
  - Ethiopia, Madagascar, and Rwanda: authorities have started taking remedial actions that could allow qualification in the coming months.
  - Mauritania: progress on resolution of pending data issues, but past slippages in macroeconomic and public expenditure management may take more time to correct.

### Nicaragua
- Status:
  - Authorities have completed all prior actions for the program.
- Staff actions expected:
  - A staff report recommending completion of the pending seventh, eighth, and ninth reviews under the PRGF arrangement and seeking an extension of the arrangement through December 2006 will be circulated shortly for Board consideration.
- Implication:
  - Completion of these reviews would satisfy the remedial measure for Nicaragua to qualify for MDRI debt relief.
  - At the same meeting, the Executive Board would also discuss the 2005 Article IV Consultation report for Nicaragua.

### Senegal
- Recent mission:
  - Mission visited Senegal during December 9-16 and completed discussions for the third and fourth reviews under the PRGF arrangement.
- Agreements and commitments:
  - Reached understandings, ad referendum, on a Memorandum of Economic and Financial Policies (MEFP) for 2006.
  - MEFP highlights the authorities’ commitment to take remedial actions required to meet MDRI criteria regarding macroeconomic performance and public expenditure management systems.
- Next steps:
  - Staff is seeking clarification from the authorities on data issues.
  - Staff plans to bring Senegal’s MDRI qualification to the Board soon, together with the third and fourth reviews.

### Ethiopia
- Status:
  - Discussions on policies to safeguard macroeconomic stability, including steps to alleviate pressures on the balance of payments, are taking place in Washington.
- Next steps:
  - Article IV consultation is envisaged to be concluded following further discussions with staff early in 2006.
- Qualification condition:
  - If these confirm that macroeconomic stability is being safeguarded, staff would be able to conclude that the requirement of six months of satisfactory macroeconomic performance has been met.
  - The Executive Board would then have the opportunity to reassess Ethiopia’s qualification for debt relief at the time of the conclusion of the Article IV consultation.

### Madagascar
- Recent mission:
  - IMF staff mission visited Madagascar during December 10–16, 2005, to continue discussions on a possible three-year arrangement under the PRGF.
- Macroeconomic performance:
  - Mission found good progress toward implementing remedial actions identified in the staff’s assessment for the MDRI.
  - Available information pointed to strong tax revenue performance so far during the fourth quarter of 2005.
  - Progress was made toward agreement on a 2006 budget consistent with the authorities’ macroeconomic objectives.
- Next steps:
  - Staff expects to undertake a new macroeconomic assessment within the context of a staff visit in early 2006.
  - Executive Board consideration of Madagascar’s qualification for MDRI debt relief could take place thereafter.

### Rwanda
- Qualification pathway:
  - Rwanda is expected to meet the criterion on macroeconomic performance under the MDRI upon completion of the sixth review under the PRGF arrangement.
- Outstanding issues:
  - Progress has been made with the completion of the audit of Prime Holdings.
  - Measures required for the observance of the related end-September performance criterion for the delayed sixth review will be implemented when this audit is published, along with a business plan.
  - Further information on other aspects of policy performance relevant to the sixth review is not yet available.

### Mauritania
- Data issues and cooperation:
  - During the November staff visit, authorities cooperated fully with staff to solve data issues that had plagued relations with the Fund since January 2004 and provided data that affect most sectors and cover many years.
  - In a recent letter to the Managing Director, the Head of State acknowledged that the communication of inaccurate data to the Fund had undermined the conduct of economic policies, regretted the consequences for the dialogue with the Fund, and assured that Mauritania is committed to full transparency, sound macroeconomic management and structural reform.
- Progress:
  - Progress has been made on the reassessment of economic and financial data.
- Remaining concerns:
  - Past slippages in macroeconomic and public expenditure management areas may take more time to correct before MDRI qualification can be recommended.

*Prepared by the Policy Development and Review Department (in consultation with other departments); Approved by Mark Allen; December 20, 2005.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2005/_122005.pdf_