Learn how the World Bank Group is helping countries with COVID-19 (coronavirus). Find Out

BRIEF

Heavily Indebted Poor Country (HIPC) Initiative

January 11, 2018

World Bank Group

Relieving the World's Poorest Countries of Unmanageable Debt Burdens
  • The HIPC and related Multilateral Debt Relief Initiative (MDRI) programs have relieved 37 participating countries of more than $100 billion in debt.
  • To date, 37 countries — 31 of them in Africa — have debt-relief for which they were eligible through the HIPC Initiative and the MDRI.
  • But challenges remain to ensure that debt burdens do not return to unsustainable levels.

The World Bank, the International Monetary Fund (IMF) and other multilateral, bilateral and commercial creditors began the Heavily Indebted Poor Country (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
Afghanistan English English
Benin English English
Bolivia

Original Framework

Enhanced Framework

Original Framework

Enhanced Framework

Burkina Faso

Original Framework

Enhanced Framework

Original Framework

Enhanced Framework

Burundi English English
Cameroon English English
Central African Republic English English
Chad English English
Comoros English English
Republic of Congo English English
Democratic Republic of Congo English English
Côte d’Ivoire English English
Ethiopia English English
The Gambia English English
Ghana English English
Guinea English English
Guinea-Bissau English English
Guyana

Original Framework

Enhanced Framework

Original Framework

Enhanced Framework

Haiti English English
Honduras English English
Liberia English English
Madagascar English English
Malawi English English
Mali

Original Framework

Enhanced Framework

Original Framework

Enhanced Framework

Mauritania English English
Mozambique

Original Framework

Enhanced Framework

Original Framework

Enhanced Framework

Nicaragua English English
Niger English English
Rwanda English English
Somalia English ...
São Tomé & Príncipe English English
Senegal English English
Sierra Leone English English
Tanzania English English
Togo English English
Uganda

Original Framework

Enhanced Framework

Original Framework

Enhanced Framework

Zambia 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.