WASHINGTON, D.C., July 1, 2010—The International Monetary Fund (IMF) and the World Bank's International Development Association (IDA) have decided to support US$12.3 billion in debt relief to the Democratic Republic of Congo (DRC).
The decisions by the Board of Directors of both institutions will generate total debt service savings of US$12.3 billion, which include US$11.1 billion under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative, and US$1.2 billion under the Multilateral Debt Relief Initiative (MDRI). Debt relief from the IMF will total US$491 million and from the World Bank’s IDA US$1,832 million, with the remainder expected to come from bilateral and commercial creditors. As a result of this relief, the DRC will no longer face a heavy debt service burden in relation to its revenue and foreign exchange resources.
The Boards determined that the country has implemented the policy measures (“triggers”) required to reach the completion point, a stage in which debt relief from both the HIPC Initiative and MDRI becomes irrevocable. The triggers included satisfactory implementation of the country’s poverty reduction and growth strategy, maintenance of macroeconomic stability, improvements in public expenditure and debt management, and improved governance and service delivery in key social sectors such as health, education and rural development.
“Reaching the HIPC completion point demonstrates the significant progress that the DRC authorities have made over the past several years in strengthening macroeconomic policy management and performance following a devastating decade-long conflict that destroyed the country’s economic and social infrastructure,” said the IMF’s Mission Chief for the DRC, Brian Ames. “The conditions for reaching the HIPC completion point provided the authorities with a policy reform framework that guided their efforts to enhance macroeconomic stability, address weaknesses in public financial management and economic governance, and reform the social sectors. Progress in each of these areas also sets a solid foundation for advancing the country’s development agenda going forward,” he added.
“We recognize the government’s huge efforts toward reaching Completion Point. This could be a turning point in DRC’s long troubled history,” said Marie-Françoise Marie-Nelly, World Bank Country Director for DRC. "Going forward, strengthening the rule of law, improving governance – especially in the oil and mining sectors – and improving the business climate are essential next steps to benefit the most vulnerable Congolese citizens,” she added.
The Democratic Republic of the Congo becomes the 30th country to reach the completion point under the HIPC Initiative. The completion point marks the end of the HIPC process for the DRC, which started in July 2003 when the Executive Boards of the IMF and the World Bank agreed that it had met the requirements for reaching the decision point, at which countries start receiving debt relief on an interim basis.
ANNEX (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 have reached their decision points, of which 30, including the Democratic Republic of the Congo, have reached the completion point.
Created in 2005, the aim of the Multilateral Debt Relief Initiative (MDRI) is to reduce further the debt of eligible low-income countries and provide additional resources to help them reach the Millennium Development Goals (MDGs). Under the MDRI, three multilateral institutions – the World Bank’s International Development Association, the International Monetary Fund 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.
 The IDA Executive Board met on July 1 and the IMF Executive Board met on June 30.