WASHINGTON, June 29, 2010 – The International Monetary Fund (IMF) and the World Bank's International Development Association (IDA) have determined that the Union of the Comoros has taken the necessary steps to reach its decision point under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative The decisions by the Executive Boards of the two institutions mark a step towards Comoros receiving US$144.8 million in net present value (NPV) terms in debt relief. The IDA Executive Board also approved interim assistance to cover part of Comoros’ debt service to the institution.
Mbuyamu Matungulu, IMF Mission Chief for Comoros, said: “In the last two years, Comoros has made progress on political and economic reforms. Despite challenging circumstances, performance under IMF-supported programs has been broadly satisfactory. Growth is trending up, and the Comorian authorities are endeavoring to strengthen macroeconomic stability by putting public finances on a firmer footing and improving public financial management. Looking ahead, fiscal discipline and the acceleration of public utilities reform, continued concessional donor support, the full delivery of HIPC and MDRI debt relief, and sound debt management will be critical for achieving medium-term macroeconomic and debt sustainability and putting the economy on a path of sustained growth and faster poverty reduction.”
Johannes Zutt, World Bank Country Director for Comoros, said: “Debt relief will enable the Government better to implement the economic reforms that are needed to support sustainable growth in Comoros. It will also free up resources to provide health care, education and other essential services to improve the livelihoods of Comorians, especially the poor.”
Comoros becomes the 36th country to reach its decision point, a stage in which it may begin receiving relief on an interim basis on servicing its debts to the IDA and IMF. HIPC debt relief from IDA will total US$45.1 million and from the IMF US$4.3 million, both in NPV terms, and will become irrevocable once the country reaches its completion point. At completion point, Comoros will also be eligible to receive assistance under the Multilateral Debt Relief Initiative (MDRI).
In order to reach its completion point, Comoros has committed to implement a set of reforms, including: maintaining macroeconomic stability as measured under the IMF’s Extended Credit Facility arrangement (formerly the Poverty Reduction and Growth Facility); implement a poverty reduction strategy comprising key pro-growth and pro-poor structural and social measures; and improve public financial management, public expenditure policy, external debt management.
Note to Editors:
The HIPC Initiative. In 1996, the World Bank and IMF launched the HIPC Initiative to create a framework in which all creditors, including multilateral creditors, can provide debt relief to the world's poorest and most heavily indebted countries to ensure debt sustainability, and thereby reduce the constraints on economic growth and poverty reduction imposed by the unsustainable debt-service burdens in these countries.
To date, 36 HIPC countries, including Comoros, have reached their decision points, of which 29 have reached the completion point (including Liberia, which did so on June 29, 2010).
Created in 2005, the aim of the Multilateral Debt Relief Initiative (MDRI) is to reduce further the debt of eligible low-income members and provide additional resources to help them reach the Millennium Development Goals (MDGs). Under the MDRI, three multilateral institutions – the World Bank’s IDA, the IMF and the African Development Fund-- provide 100 percent debt relief on eligible debts to qualifying countries, normally at the time they reach the HIPC Initiative completion point.