April 28, 2000
The HIPC Initiative was launched by the World Bank and the IMF in 1996, and endorsed by some 180 governments around the world as an effective and welcome approach to help poor, severely indebted countries reduce debt as part of an overall poverty reduction strategy. In September 1999, at the Annual Meetings of the World Bank and IMF, the HIPC Initiative was significantly expanded to provide deeper, broader and faster debt relief to some three dozen countries. This enhancement, and a redesigned strategy to link debt relief to poverty reduction, will help to eliminate debt as an obstacle to development and allow countries to invest more in their future. The Initiative is designed to reduce debts to sustainable levels for poor countries that pursue economic and social policy reforms, and is used specifically in cases where traditional debt relief mechanisms will not be enough to help countries exit from the rescheduling process.
The World Bank welcomes the announcement by the Danish Minister for Development Cooperation, Mr. Jan Trí¸jborg, that Denmark will contribute US$19 million (150 million Danish Kroners) to the Trust Fund for Heavily Indebted Poor Countries (HIPC). This contribution is an important step forward in a concerted international effort to mobilize resources needed to assist multilateral creditors with the implementation of the HIPC Initiative.
Denmark has been a strong supporter of HIPC Initiative since its inception. This announcement of new resources comes in addition to a previous contribution of $US26 million to the Trust Fund, as well as approximately $US16 million as its share of the European Union's contribution. Moreover, Denmark has provided more than $US600 million in relief on public and publicly guaranteed loans. Since 1990 alone, Denmark has also contributed more than $US150 million to the reduction of the poorest countries' debt to the multilateral development banks.
The HIPC Trust Fund is an instrument which allows bilateral donors to contribute financing to help cover the costs of multilateral organizations under the HIPC Initiative. To date, the Trust Fund has raised more than US$2.4 billion in pledges and paid-in contributions from bilateral donors.
"I am pleased to learn about this important contribution" said World Bank President James D. Wolfensohn. "This effort, in addition to recent announcements by other countries, demonstrates, once more, the commitment by the international community to help deliver debt relief to the world's poorest, most heavily indebted countries, and is another critical building block in securing full financing of the enhanced HIPC Initiative."
To date, nine countries have qualified for some $14 billion in debt service relief. Five countries-Bolivia, Mauritania, Mozambique, Tanzania, and Uganda-have qualified under the enhanced framework. When completed, the HIPC Initiative is scheduled to deliver approximately $50 billion in debt service relief to more than 30 eligible countries.
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