Press Release: IMF and World Bank Support Burundi's Completion Point under the Enhanced HIPC Initiative and Approve Debt Relief under the Multilateral Debt Relief Initiative

IMF News, January 29, 2009

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Canonical URL: Press Release: IMF and World Bank Support Burundi's Completion Point under the Enhanced HIPC Initiative and Approve Debt Relief under the Multilateral Debt Relief Initiative

The World Bank's International Development Association (IDA) and the International Monetary Fund (IMF) agreed that Burundi has made sufficient progress to reach its completion point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative.
Burundi becomes the 24th country to reach the completion point under the Enhanced HIPC Initiative.
As a result, Burundi also becomes eligible for further debt relief under the Multilateral Debt Relief Initiative (MDRI).

HIPC debt relief from all creditors revised upward to US$833 million in net present value (NPV) terms from US$826 million estimated at the time of the decision point document.
HIPC debt relief from IDA: US$425 million (NPV terms).
HIPC debt relief from the IMF: SDR19 million (US$28 million) (NPV terms).
MDRI relief net of HIPC assistance would lead to a nominal reduction of debt owed to:
- IDA by US$90 million.
- the IMF by SDR9 million (US$15 million).

Measures completed aimed at preparing and implementing a national poverty reduction strategy.
Maintenance of a stable macroeconomic environment.
Establishment of mechanisms to ensure efficient and transparent use of HIPC interim debt relief.
Strengthening public expenditure management.
Implementation of governance measures related to social sector services delivery.
Improvement of debt management capacity.
Additional progress on demobilization, the coffee sector, and social sectors.

John M. McIntire, World Bank Country Director for Tanzania, Uganda, and Burundi: welcomed full debt relief under HIPC and MDRI, confirmed the quality of Burundi's fiscal and debt management as it emerges from conflict, and urged authorities to maintain momentum toward the goals of their national Poverty Reduction Strategy Program by using debt relief for its intended purposes.
Bernardin Akitoby, IMF Mission Chief for Burundi: commended authorities for the milestone, noted debt relief will reduce Burundi's debt burden and free resources to finance spending critical to meeting the Millennium Development Goals, and emphasized the challenge to maintain a sustainable external and domestic debt position through careful borrowing and prudent fiscal policy.

Launched in 1996 by the World Bank and IMF to create a framework for creditors, including multilateral creditors, to provide debt relief to the world's poorest and most heavily indebted countries.
Modified in 1999 with three key enhancements:
- Deeper and Broader Relief: external debt thresholds were lowered, making more countries eligible and increasing relief for some.
- Faster Relief: some creditors provided interim debt relief immediately at the "decision point" and permitted faster progression to the "completion point."
- Stronger Link between Debt Relief and Poverty Reduction: freed resources were to be used to support poverty reduction strategies developed through broad consultative processes.
To date, 35 HIPC countries have reached their decision points, of which 24 (including Burundi) have reached the completion point.

Announced following the July 2005 G8 Summit in Gleneagles, Scotland, to cancel the debt of the world's most indebted countries and help them reach the Millennium Development Goals (MDGs).
The MDRI is separate from, but operationally linked to, the HIPC Initiative.
Under MDRI, three multilateral institutions — IDA, IMF, and the African Development Fund (AfDF) — provide 100 percent debt relief on eligible debts to countries having reached the HIPC completion point.
MDRI does not involve official bilateral or commercial creditors, nor multilateral institutions other than IDA, IMF, and AfDF.
Footnotes in the original text:
- Net present value of debt is the discounted sum of all future debt service obligations (interest and principal).
- Nominal terms refer to the actual dollar value of debt service forgiven over a period of time.
- The IMF also provided MDRI debt relief to non-HIPCs whose income per capita is below US$380 in order to ensure uniformity of treatment in the use of IMF resources.

Press Release No. 09/18, January 29, 2009 — International Monetary Fund