The G-8 Debt Cancellation Proposal and Its Implications for the Fund—Further Considerations

Prepared by the Policy Development and Review, Legal and Finance Departments

September 19, 2005

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  1. Introduction
  2. Eligibility and Uniformity of Treatment
    1. Summary of Relevant Legal Considerations
    2. Uniformity of Treatment and the G-8 Proposal
  3. Conditionality
    1. Making Entry Conditionality under the G-8 Proposal Operational
    2. Ongoing Conditionality
    3. Entry Conditionality for Non–HIPCs
    4. Coordination with the World Bank
  4. Issues Related to the Protracted Arrears Cases
  5. Financial Implications
    1. Cost of the G-8 Proposal
    2. Financing Sources
    3. Impact on the Interim PRGF
    4. Options for Self-Sustained PRGF Lending
    5. Mitigating the Impact on the GRA


Table 1. Per Capita Income Levels and Fund Exposure of PRGF-Eligible Countries
Table 2. Fund Credit Outstanding to PRGF-Eligible Countries, 2004-2005
Table 3. Fund Credit Outstanding to 35 HIPCs
Table 4. Incremental Cost of Proposed Debt Relief to 35 HIPCs
Table 5. Sources and Uses of Financing


Box 1. Subsidy Account of the PRGF Trust
Box 2. Reserve Account and Self-Sustained PRGF Commitment Capacity


Annex 1. Estimates of the Potential Demand for PRGF Loans 2007-2011