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Hipc Initiative

Volume 401: debated on Tuesday 18 March 2003

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To ask the Secretary of State for International Development how many countries have qualified for debt relief under the HIPC initiative; how much relief has been granted to those countries; and if she will make a statement on the prospects for qualification of other countries. [103022]

So far, 26 countries out of a total of 37 eligible countries have qualified for relief under the Heavily Indebted Poor Countries (HIPC) Initiative, and will receive over US$62 billion in debt relief. Of these, seven countries (Bolivia, Burkina Faso, Mali, Mauritania, Mozambique, Tanzania and Uganda) have reached Completion Point and have received irrevocable debt relief. The remaining 19 (Benin, Cameroon, Chad, Ethiopia, Ghana, Guinea, Guinea Bissau, Guyana, Honduras, Madagascar, Malawi, Mali, Nicaragua, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone and Zambia) are receiving interim relief on their debt repayments. We expect the bulk of these countries to reach Completion Point within the next two years when they, too, will receive full debt relief. It is difficult to predict when the other 11 countries will qualify for HIPC relief, as many are still affected by conflict and governance problems. We expect the Democratic Republic of the Congo to reach its Decision Point in the coming months, and the Central African Republic, Comoros and Cote d'Ivoire to do so later this year but, in some cases, this will depend on progress towards peace. The remaining countries (Burundi, Congo Republic, Liberia, Myanmar, Somalia, Sudan and Togo) are a long way from qualifying, as they are affected by conflict or have serious governance concerns.

To ask the Secretary of State for International Development whether social and environmental criteria are used in addition to economic data in determining whether countries qualify for debt relief under the HIPC initiative. [103024]

The enhanced Heavily Indebted Poor Countries (HIPC) Initiative is based on a set of clear and transparent rules, which countries entering the Initiative must meet. The IMF and the World bank work jointly with the governments of eligible countries on a debt sustainability analysis to determine their levels of debt. To qualify for relief, a country must have a debt sustainability ratio above one or other of the following HIPC thresholds: a debt stock of more than 150 per cent. of exports or of more than 250 per cent. of government revenue. Relief is provided to bring debt ratios down to these levels. This analysis is based on actual data on average exports over the previous three years and on central government revenues over the most recent year. Debt ratios reflect the impact of HIV/AIDS, droughts, and external shocks, such as changes in commodity prices, on a country's economy. Under the HIPC Initiative, additional relief—so called 'topping up'—can, when appropriate, be provided at Completion Point to ensure that countries exit the HIPC process with sustainable levels of debt. The UK is pressing for greater flexibility to ensure that this is provided wherever it is needed.