Way back in 1996 the IMF launched an initiative together with the World Bank. It’s aim was to ensure that no country faced a debt burden that it would be unable to manage. Since that date it has worked with the financial community on a global level to reduce debts in poor countries to sustainable levels. Some may think it is unfortunate that the rich countries were not included in this initiative of debt reduction.
The whole initiative was reviewed in 1999 and improvements were made based on experience. This was then supplemented in 2005 when the HIPC was supplemented by more acronyms – the MDRI (Multilateral Debt Relief Initiative). This actually allowed a country to get relief of 100% of it’s debts from funds controlled by the IMF, the World Bank and the African Development Fund.
The conditions for eligibility were as follows –
- be eligible to borrow from the World Bank’s International Development Agency, which provides interest-free loans and grants to the world’s poorest countries, and from the IMF’s Poverty Reduction and Growth Trust, which provides loans to low-income countries at subsidized rates.
- face an unsustainable debt burden that cannot be addressed through traditional debt relief mechanisms.
- have established a track record of reform and sound policies through IMF- and World Bank supported programs
- have developed a poverty Reduction Strategy Paper (PRSP) through a broad-based participatory process in the country.
It’s good news really as out of the 39 countries eligible or close for HIPC aid currently 34 are receiving full debt relief. Several are coming close to achieving their debt relief criteria and decisions are pending. There are still many issues in some of these countries regarding human rights but poverty is likely to act as a barrier to solving these. It is advised in many of these countries to use a fake IP address ( check here for some advice – http://www.theninjaproxy.org/tv/a-fake-uk-ip-address/ ) when visiting as their ISPs are often heavily logged or filtered.
This is particularly one area that developing countries should focus on as the internet offers employment and entrepreneurial opportunities for lots of the population when the infrastructure is improved.