Press Release: Côte d'Ivoire Reaches Decision Point Under the Enhanced HIPC Debt Relief Initiative
IMF News, March 31, 2009
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- Published: March 31, 2009
Overview
- The World Bank's International Development Association (IDA) and the International Monetary Fund (IMF) agreed that the Republic of Côte d'Ivoire qualifies for debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative, enabling it to reach the decision point.
- Côte d'Ivoire becomes the 35th country to reach its decision point.
- Côte d'Ivoire will receive interim debt relief from certain creditors between the decision and completion points, and will access Multilateral Debt Relief Initiative (MDRI) relief when it reaches the HIPC completion point.
Conditions for Decision Point, Completion Point, and Program Requirements
- Decision point reached based on adopted reforms and performance under IMF-supported programs.
- Requirements to reach the completion point include:
- Implementation of the Poverty Reduction Strategy (PRS) for at least one year.
- Maintenance of macroeconomic stability demonstrated by satisfactory performance under an arrangement under the Poverty Reduction and Growth Facility (PRGF).
- Implementation of floating completion point triggers covering key structural and social reforms, including public finance management, debt management, and governance.
- Interim debt relief is available in the period between the decision and completion points, in line with existing HIPC initiative guidelines.
Specifics of the Debt Relief Operation (exact figures preserved)
- Côte d'Ivoire's public and publicly guaranteed external debt was estimated at US$14.3 billion in nominal terms as of end-December 2007, equivalent to US$12.8 billion in net present value (NPV) terms.
- Debt relief under the enhanced HIPC Initiative is estimated at US$3.0 billion in NPV terms, equivalent to a 23.6 percent reduction of its debt after traditional debt relief mechanisms.
- Upon reaching the HIPC completion point, Côte d'Ivoire would also access MDRI debt relief projected at:
- US$1, 692.6 million from IDA,
- US$311.6 million from the AfDF,
- US$9.3 million from the IMF.
- Côte d'Ivoire has already received about half of its estimated HIPC debt relief through past debt reschedulings and concessional arrears clearance operations.
- The combination of traditional debt relief, HIPC debt relief, MDRI relief, and additional bilateral relief beyond HIPC would bring the NPV of debt to 75 percent of fiscal revenues in 2011, compared to 327 percent in 2007.
Economic and Social Context (key statistics preserved)
- Gross national income (GNI) per capita: US$960 in 2007.
- Real per capita GDP fell by 15 percent in 2000-2006.
- Poverty incidence increased from 38.2 percent in 2002 to 48.9 percent in 2008.
- UN Development Index ranking: 166th (out of 177 countries) in 2007; 1999 ranking was 154th out of 174.
Policy Messages, Reforms, and Implementation Priorities
- Continued priority reforms and actions identified:
- Prudent macroeconomic policies to achieve debt sustainability and sustained growth.
- More transparent public finance management.
- Improved governance in the handling of public resources.
- Implementation and monitoring of PRS priorities to protect and expand pro-poor and pro-growth spending.
- Acceleration of reforms in key sectors mentioned by the World Bank, including energy and cocoa/coffee sectors, and strengthening social programs as reflected in Completion Point triggers.
- Expected benefits of successful implementation:
- Free up resources to finance essential spending in social sectors.
- Foster increased economic growth and improved living standards.
HIPC Initiative Context and Outcomes to Date
- The HIPC Initiative, launched in 1996 and modified in 1999, introduced three enhancements:
- Deeper and Broader Relief: External debt thresholds were lowered to expand eligibility and potential relief.
- Faster Relief: Interim debt relief at the decision point and faster progression to the completion point.
- Stronger Link Between Debt Relief and Poverty Reduction: Freed resources to support nationally developed poverty reduction strategies.
- To date, 35 HIPC countries have reached their decision points, of which 24 have reached completion point.
Source: IMF Press Release, March 31, 2009.