The HIPC Activity: Issues for Thought.


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The HIPC Initiative: Issues for Consideration April, 2006 Outline What is the HIPC Initiative? The Sunset Clause The HIPC Process from Decision to Completion Point MDRI Impact on Public Finances Main Considerations What is the HIPC Initiative?
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The HIPC Initiative: Issues for Consideration April, 2006

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Outline What is the HIPC Initiative? The Sunset Clause The HIPC Process from Decision to Completion Point MDRI Impact on Public Finances Main Considerations

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What is the HIPC Initiative? The HIPC Initiative is an obligation alleviation activity (DRI) established mutually by the IMF and the World Bank in 1996 and upgraded in 1999. It is the main DRI that incorporates obligation help from multilateral loan bosses. Objective: to guarantee quick and profound obligation help in this manner adding to neediness diminishment. In this way, 28 nations are profiting under the HIPC Initiative and 18 have moved on from it.

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18 Benin Bolivia Burkina Faso Ethiopia Ghana Guyana Honduras Madagascar Mali 10 Burundi Comoros Mauritania Cameroon Central African Rep. Mozambique Chad Congo, Republic of Nicaragua Congo DRC Cote d\'Ivoire Niger The Gambia Lao PDR Rwanda Guinea Liberia Senegal Guinea-Bissau Myanmar Tanzania Malawi Somalia Uganda Sao Tome & Principe Sudan Zambia Sierra Leone Togo Post-HIPC Interim-HIPC Pre HIPC Implementation to Date 38 Participating Countries

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The HIPC Sunset Clause A "dusk statement" was incorporated to keep HIPC from turning into a changeless office. In September 2004, the Boards of the World Bank and IMF chose to extend the dusk proviso to end-2006 and to point of confinement ("ring-fence") its application to nations satisfying the pay and obligation criteria as of end-2004.

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Status of the Assessment Four nations seem liable to be recently qualified Work proceeds on these four in addition to five other conceivable cases The last rundown is expected by April 2006 Governments pick whether to enter the Initiative

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The HIPC Process

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Interim help The HIPC Process Preliminary Document Interim Period Country meets HIPC qualification criteria Irrevocable Debt Relief Completion Point Decision Point Satisfactory execution of change system One year of execution of PRSP Meet finish point triggers 6 months on track with change project and PRSP or I-PRSP set up Calculation of alleviation due Agreement on nation particular fulfillment point triggers

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Where does Kyrgyz Stand?

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The Multilateral Debt Relief Initiative (MDRI)

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The MDRI The MDRI on IDA and IMF claims happens at the HIPC Completion Point: A nation must come to the HIPC Completion Point. 100% cancelation of remarkable obligation to the IDA (as of end-2003) and the IMF (as of end-2004). For the Kyrgyz Republic, introductory figures recommend an obligation discount of generally USD 520 million (accepting consummation point in Dec-2007). Proviso: All figures are "back of the envelope" and proposed for illustrative purposes just

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Likely Impact on Public Finances In 2007, HIPC obligation administration alleviation (interval help) will be generally USD 30 million. When Completion Point is achieved, yearly obligation administration alleviation, including the MDRI, will be diminished by a normal USD 42 million more than 2007-2025. Measure of obligation administration lessening will stay generous, however it will by and large decrease from there on.

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Estimated Debt Service Relief Includes HIPC and MDRI help. Red numbers are midpoints for the years concerned.

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Benefits Direct, unalterable obligation administration help from multilateral, reciprocal, and business loan bosses MDRI: 100% obligation cancelation from IDA and IMF Debt alleviation makes financial space for social spending Policy flagging Strong duty to adjustment Credit value Considerations Additional restriction however most imagined by the NPRS Some two-sided lenders may downsize new help for a couple of years after they give obligation alleviation Main Considerations

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Additional Considerations Concerns that turning into a HIPC would antagonistically influence FDI inflows into Kyrgyz Republic are unwarranted: Current or imminent FDI are fundamentally in conventional divisions; Large share of FDI originates from the CIS or neighbor nations and would not be hindered by the HIPC status; in actuality, better obligation dissolvability pointers and basic changes would send a solid sign to potential speculators.

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Special case – MDRI by the IMF Non-HIPC nations are qualified to get the MDRI on IMF claims if their per capita salary is underneath USD 380. Under this window, the IMF crossed out USD 99 million in the red owed by Tajikistan.

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Thank You http://www.worldbank.org/obligation http://imf.org/outside/np/exr/realities/mdri.htm http://www.imf.org/outer/np/exr/actualities/hipc.htm

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