Press Release No. 99/57

The International Monetary Fund's (IMF) Executive Board today took the decisions necessary to enable the IMF to begin to make its contribution to the strengthened Heavily Indebted Poor Countries Initiative (HIPC)¹ and the Poverty Reduction and Growth Facility (PRGF).² The financing requirements of the PRGF-HIPC Trust will be met by contributions from member countries and the IMF itself, including resources derived from off-market transactions in gold by the IMF (see News Brief No. 99/62).

The IMF has already begun to receive bilateral contributions and, with the finalization of members' pledges, is expected to obtain further significant amounts of contributions to the PRGF-HIPC Trust.

The IMF will begin off-market gold transactions in the next few days. The investment income from the profits generated by these gold transactions will be used to provide debt relief under the HIPC Initiative. So far, the Board has authorized the transfer of about two-thirds of the investment income for this purpose; it is expected that the Board will review PRGF-HIPC financing in the Spring of 2000, including the transfer of the remaining amount of investment income.

IMF Managing Director Michel Camdessus thanked all Executive Directors for their tireless efforts in supporting these important initiatives. "As a result, the Fund is now in a position to begin to make its contribution to the strengthened HIPC Initiative as member countries qualify for HIPC assistance," he said.

---

¹The HIPC Initiative entails coordinated action by the international financial community, including multilateral institutions, to reduce to sustainable levels the external debt burden of heavily indebted poor countries that pursue IMF and World Bank-supported adjustment and reform programs, but for whom traditional debt relief mechanisms are insufficient.

²On November 22, 1999, the Enhanced Structural Adjustment Facility (ESAF) was renamed the Poverty Reduction and Growth Facility (PRGF), and its objectives were changed to support programs to strengthen substantially and in a sustainable manner balance of payments positions, and to foster durable growth, leading to higher living standards and a reduction in poverty. The PRGF is a concessional IMF facility for assisting eligible members that are undertaking economic reform programs to strengthen their balance of payments, and improve their growth prospects. PRGF loans carry an interest rate of 0.5% and are repayable over 10 years with a 5½-year grace on principal payments.