The World Bank, the International Monetary Fund (IMF) and other multilateral, bilateral and commercial creditors began the Heavily Indebted Poor Countries (HIPC) Initiative in 1996. The program was designed to ensure that the poorest countries in the world are not overwhelmed by unmanageable or unsustainable debt burdens. It reduces the debt of countries meeting strict criteria.
The following countries have qualified for debt-relief under the HIPC Initiative and the MDRI.
|Country||Decision Point Document||Completion Point Document|
|Central African Republic||English||English|
|Republic of Congo||English||English|
|Democratic Republic of Congo||English||English|
|São Tomé & Príncipe||English||English|
As of March 2020, the IMF and the World Bank have determined that Somalia has taken the necessary steps to begin receiving debt relief.
Eritrea and Sudan are potentially eligible for debt relief but have not yet started the process.
To be eligible for the HIPC Initiative a country must:
- Face unsustainable debt situation after the full the full application of the traditional debt relief mechanisms (such as the application of Naples terms under the Paris Club agreement).
- Be only eligible for highly concessional assistance from the International Development Association (IDA) and from the IMF’s Poverty Reduction and Growth Trust (PGRT).
- Have established a track record of reform and sound policies through IMF and World Bank supported programs.
- Establish a track record of reform and develops a Poverty Reduction Strategy Paper (PRSP) that involves civil society participation.
The Way Forward
As the HIPC program has matured, the international community has focused on strengthening the links between debt relief and poverty-reduction efforts.
Challenges remain to ensure that debt burdens do not return to unsustainable levels, however. These include:
- Establishing a track record of reform in the remaining three countries potentially eligible for HIPC; some of these countries are affected by conflict, and this has led to problems of protracted external arrears.
- Strengthening management of debt and public finances in all countries.
- Ensuring full participation by creditors.
Beyond debt relief, long-term debt sustainability requires efforts by borrowers, lenders, and donors to promote prudent borrowing, suitably concessional finance, sustained economic growth, diversified exports, and greater access to markets in developed countries.