INTERNATIONALDEVELOPMENT ASSOCIATION AND INTERNATIONALMONETARY FUND Heavily IndebtedPoor Countries(HIPC)Initiative: Status of Implementation Preparedby the Staffs of the World BankandIMF Approved by GobindNankaniandMark Allen August 20. 2004 Contents Page I. Executive Summary...................................................................................................... -5 I1. Introduction .................................................................................................................... 6 I11. 6 A. ImplementationUpdate.................................................................................................. 6 Impact ofHIPC Initiative Relief...................................................................... ProgressinQualifying for HIPC Initiative Relief............................................. B. 10 I V. Updateof Costs............................................................................................................ 13 A. ProjectedCosts ofHIPC Initiative Relief ........................................................ 13 B. PotentialCostsofToppingUp ......................................................................... 14 V. Creditor Participation................................................................................................... 15 A. Multilateral Creditors ....................................................................................... 15 B Commercial Creditorsand Creditor Litigation................................................ Official Bilateral Creditors .............................................................................. 16 C .. 18 VI. Other HIPC Initiative Issues........................................................................................ 20 A B .. Extension ofthe Sunset Clause ........................................................................ 20 The Analysis for ToppingUp .......................................................................... 22 VI1. Debt and Debt ServiceinPost-CompletionPoint Countries....................................... 23 VI11. Issues for Discussion.................................................................................................... 25 - 2 - Figures 1. DebtStock Reduction .................................................................................................... 11 2. DebtService Ratios for the 27 Countriesthat haveReachedDecision or Completion Points............................................................................................................................... 12 3. ReachedDecisionor Completion Points ........................................................................ Poverty-Reducing Expenditures and External Debt Service in27 Countries That Have 13 Text Boxes 1. Box 1.IDA'SHIPC Trust Fund...................................................................................... 17 Text Tables 1. HIPC Initiative: Committed Debt Reliefand Outlook ..................................................... 7 2. HIPCs inthe InterimPeriod: Key FactorsAffecting Policy PerformanceinCountries that Experience Delays inthe Implementation of PRGF-Supported Programs ................9 3 HIPC Initiative: Distributionof Estimated Costs by Main Creditors and Country Groups ............................................................................................................................. 14 4. Creditors InvolvedinLitigationAgainst HIPCs ............................................................ 19 5. Decomposition of Contributing Factors.......................................................................... Change inDebtRatios from Completion Point Reference Year to end-2003: 24 Annexes I CountryCoverage.DataSources.andAssumptionsfortheHIPCCostingExerciseand . the Post-Completion Point DebtRatio Updates.............................................................. 26% I1. HIPC Initiative: Progress inImplementation by Country ............................................... 29 I11. EnhancedHIPC Initiative: Country Implementation StatusNotes ................................. IV. Comparison of Debt Indicators BetweenHIPCs and Other Developing Countries .......32 71 Appendix Tables 1A. Summary of Debt Service for 27 DecisionPoint HIPCs ............................................... 72 1B. Debt Service for Individual HIPCs that ReachedDecisionPoints. by Country. 1999- 2A Poverty-Reducing Expenditures by the 27 HIPCs that ReachedDecision Points..........73 2B ..2006 ................................................................................................................................ 76 Poverty-Reducing Expenditures for IndividualHIPCsthat ReachedDecision Points, by Country .......................................................................................................................... 77 3. HIPC Initiative: Changesinthe Estimates o fPotential Costsby Creditor Group for 37 HIPCs.............................................................................................................................. 79 4. HIPC Initiative: Breakdown of Estimated Potential Costs by Main Creditors and by 80 ProjectedNPV of Debt inExcess of HIPC Threshold Ratios ........................................ Country Groups............................................................................................................... 81 6. 5. HIPC Initiative: Estimates o f Costs to Multilateral Creditors and Status of Their 82 7B. HIPC Initiative: Estimated Deliveryo f World BankAssistance, 2000-09 ....................84 7A. HIPC Initiative: Status of Delivery o f Assistanceby the World Bank........................... Commitments.................................................................................................................. 83 SA HIPC Initiative: Statusof Commitments bythe IMF..................................................... . 86 - 3 - 8B HIPC Initiative: Estimated Delivery of IMFAssistance. 1998-2010............................. 87 9.. 89 10A.HIPC Initiative: EstimatedParis Club Costs. by Creditor Country................................ Status of Bilateral Donor Pledgesto the HIPC Trust Fund ........................................... 1OB HIPC Initiative:Paris Club DebtRelief......................................................................... 90 92 11 12A. Paris Initiative: EstimatedNon-Paris Club Official Bilaterals' Costs, by Creditor .. Club Creditors' Delivery of Debt ReliefUnder BilateralInitiatives..................... 94 HIPC country ...........................................................................................................................95 12B. HIPC Initiative: Delivery ofAssistance by Non-Paris Club Creditors ......................... -99 - 4 - ABBREVIATIONSAND ACRONYMS AfDB Afiican Development Bank AFESD Arab Fundfor Social andEconomic Development AMF Arab Monetary Fund AsDB AsianDevelopment Bank BADEA Arab Bank for Economic Development inAfiica BCEAO Central Bank o f West Afiican States BDEAC Banque de dkveloppement des Btats de 1'Afiiquecentrale (Central African States Development Bank) BDEGL Banque de Dkvelopment des Etats des Grand Lacs (Development Bank o f Great Lake States) BEAC Banquedes Etats de 1'AfiiqueCentrale (BankofCentral African States) BOAD West Afiican DevelopmentBank CABEI Central American Bank for Economic Integration CAF Corporacih Andina de Foment0 CAS County Assistance Strategy CDB Caribbean DevelopmentBank CIRR Commercial Interest Reference Rate CMCF CARICOM MultilateralClearing Facility DRC Democratic Republic o f Congo DSA Debt Sustainability Analysis EADB East African Development Bank ECOWAS Economic Community o f West African States EIB European Investment Bank EU EuropeanUnion EUR Euro FEGECE Fonds d'entraide et de garantie des emprunts du Conseil del'Entente FOCEM Fondo Centroamericano de EstabilizacihMonetaria FONPLATA Fundfor the FinancialDevelopment o fthe River PlateBasin FSID Fundfor Solidarity andEconomic Development GDF Global Development Finance GDP Gross Domestic Product HIPC Heavily IndebtedPoor Country IDB Inter-American Development Bank IBRD International Bank for Reconstruction and Development IDA International Development Association IFAD International Fundfor Agricultural Development IFMIS IntegratedFinancial Management Information System IMF InternationalMonetary Fund I-PRSP InterimPoverty Reduction Strategy Paper IsDB Islamic Development Bank MDB Multilateral Development Bank MTEF Medium-Term Expenditure Framework NDF Nordic Development Fund NIB Nordic InvestmentBank NPV Net Present Value OPEC OPEC Fundfor International Development PTA Eastern and Southern African Trade andDevelopment Bank PEM Public Expenditure Management PERs Public Expenditure Reviews PRGF Poverty Reduction andGrowth Facility PRSP Poverty Reduction Strategy Paper SDR Special Drawing Rights SMP StaffMonitored Program - 5 - I.EXECUTIVE SUMMARY Progressinimplementation.Since September2003, six countries (Guyana, Nicaragua, Niger, Ethiopia, Senegal, and Ghana) have reachedtheir completionpoints. As aresult, fourteen countries, more thanhalfofthe 27 that have reachedthe decision point, have now qualified to receive irrevocably all debt relief committed under the enhancedHIPC Initiative. Maintainingmacroeconomic stability remains a challenge for the 13 countries that are inthe interimperiod. Roughly halfofthese countries have experienceddifficulties inpolicy implementation, particularly inthe areas of public resourcemanagementand structural reform. Only three countries have yet to complete their full PRSPs. Impactof HIPC relief. HIPCreliefcommitted to the 27 countries that have reachedtheir decision or completion points, together with other debt relief initiatives, representsatwo- thirds reduction ofthe overall debt stock ofthese countries. Debtservice-to-exports ratios have also been substantially reducedto an average of 10percent. Savings from lower debt- service payments have contributed to a substantial increaseinpoverty-reducing expenditures. Cost and creditorparticipation.The cost ofproviding debt reliefunder the HIPC Initiative to 37 HIPCs including Liberia, Somalia, and Sudanis estimated at US$54.5 billion in2003 NPV terms. Over 20 non-Paris Club official bilateral andmost commercial creditors havenot indicatedtheir intentionto participate inthe enhancedHIPC Initiative.Mobilizing the participation o fthese creditors requires persistent efforts by HIPCs. Sunset clause. Inlight ofBoarddiscussionsinJuly ona staffpaper outliningthe possible options, staffs proposethat the sunset clausebe extendedby another two years to end-2006 to provide the opportunity for the remaining HIPCs to beginto establish a policy track record that would allow their consideration for HIPC relief, Analysis for toppingup.The case for topping up should continue to be consideredona case-by-casebasis basedon a strengthened analysis at the completion point, includingonthe impact of discount rate changes andunanticipatednewborrowing, where relevant. Debtsituationinpost-completionpointcountries.Anupdate of debt stock anddebt- service indicators inthese countries indicates that, notwithstanding HIPCs' highvulnerability to shocks, soundeconomic policies, andclose monitoringusing the framework of debt sustainability analysis for low-income countries would help prevent the re-emergence of unsustainabledebt. - 6 - 11. INTRODUCTION 1. This report reviewsprogressinthe implementation ofthe enhancedHIPC Initiative since September2003.' It includes updateson the status of implementation incountries duringtheir interimperiod, the status ofcreditor participationunderthe Initiative, andthe estimated costs ofthe HIPC InitiativeincludingLiberia, Somalia, and Sudan.The report suggests improvements to the analysis for the consideration of additional debt relief at the completion point (topping up)taking into account the experience so far andproposesan extension ofthe sunset clausebasedon discussions inthe Boards o f ajoint staff paper outliningthe possible options? Finally, the report provides anupdate ofthe external debt situation inpost-completion point countries, emphasizing the importance o f soundpolicies and close monitoring usingthe framework o fdebt sustainability analysis for low-income countries inpreventing the re-emergenceo funsustainabledebt. 111. IMPLEMENTATION UPDATE A. Progress inQualifying for HIPCInitiativeRelief 2. Since September 2003, six countries (Guyana, Nicaragua, Niger, Ethiopia, Senegal, and Ghana) have reachedtheir completion points, increasingthe number o fpost- completion point HIPCs from eight to 14as of end-July 2004 (Table 1). These countries are inthe processof receiving all debtreliefcommitted underthe enhancedHIPCInitiative. Looking ahead, Madagascar couldreachthe completion point bythe endof 2004. 'A six-monthly statistical updatewas issuedinApril2004. See IMF and World Bank "Initiative for Heavily IndebtedPoor Countries-Statistical Update" (SM/04/109,4/1/04), hm://www.imf.ordextemaWnu/hiDc/doc.htmand IDAISecM2004-0184. http://worldbank.ors/hitx. See IMFandWorldBank "Enhanced HIPCInitiative:PossibleOptionsRegardingthe Sunset Clause" (EBS/04/96, 7/8/04) and IDNSecM2004-0512, July 7,2004. - 7 - Table 1. HIPC Initiative: Committed DebtReliefand Outlook 1/ As ofJuly 2004 (In millions of US dollars, in NPVterms in the year of the decision or completion point) ReductioninNPV Terms Nominal Debt ServiceRelief Original Enhanced Original Enhanced Completion/ HIPC HIPC Total Decision Initiative HIPC Initiative Total Initiative Initiative Point Date Countries that have reached their Completion Points (14) TOTAL 3,118 14,433 17,552 6,364 22,999 29,363 Benin 0 265 265 0 460 460 Mar-03 Bolivia 448 854 1,302 760 1,300 2,060 Jun-01 Burkina Faso21 229 324 553 400 530 930 Apr-02 Ethiopia 21 0 1,982 1,982 0 3,275 3,275 Apr-04 Guyana 256 335 591 634 719 1,353 Dec-03 Ghana 0 2,186 2,186 0 3,500 3,500 Jul-04 Mali 121 411 539 220 675 895 Mar-03 Mauritania 0 622 622 0 1,100 1,100 Jun-02 Mozambique 1,717 306 2,023 3,700 600 4,300 Sep-01 Nicaragua 0 3,308 3,308 0 4,500 4,500 Jan-04 Niger 21 0 664 664 0 1,190 1,190 Apr-04 Senegal 0 488 488 0 850 850 Apr-04 Tanzania 0 2,026 2,026 0 3,000 3,000 NOV-01 Uganda 347 656 1,003 650 1,300 1,950 May-00 Countries that have reached their Decision Points (13) TOTAL 0 14,430 14,430 0 24,329 24,329 Cameroon 0 1,260 1,260 0 2,800 2,800 Oct-00 Chad 0 170 170 0 260 260 May-01 Congo, Dem, Rep.of 0 6,311 6,3 11 0 10,389 10,389 Jul-03 Gambia, The 0 67 67 0 90 90 Dec-00 Guinea 0 545 545 0 800 800 Dec-00 Guinea-Bissau 0 416 416 0 190 790 Dec-00 Honduras 0 556 556 0 900 900 Jul-00 Madagascar 0 814 814 0 1,500 1,500 Dec-00 Malawi 0 643 643 0 1,000 1,000 Dec-00 Rwanda 0 452 452 0 800 800 Dec-00 ,520 Tome and Principe 0 97 97 0 200 200 Dec-00 SierraLeone 0 600 600 0 950 950 Mar-02 Zambia 0 2,499 2,499 0 3,850 3,850 Dec-00 Countries still to be considered (11) CBted'Ivoire 31 345 ... 345 800 ... 800 Burundi ... ... ... .., ... ... CentralAfrican Republic ... ... ... ... ... ... Comoros ... ... ... ... ... ... Congo, Rep.of ... ... ... ... ... ... Lao PDR ... ... ... ... ... ... Liberia ... ... ... ... ... ... Myanmar ... ... ... ... ... ... Somalia ... ... ... ... ... ... Sudan ... ... ... ... ... ... Togo ... ... ... ... ... ... Memorandum item: Debt reliefcommitted 3,118 28,863 31,981 6,364 47,328 53,692 Sources: HIPCcountry documents; and World Bankand Ih4Fstaff estimates. 11 Commiteddebt reliefunder the assumptionof full participation ofthe creditors. 21The assistanceunder the enhancedHIPC Initiative includesthe topping up with the NPV calculatedin the year of the completion point. 31 CBte dIvoire reachedits decisionpoint under the original-HIPC Initiativein 1998, but did not reachits completion point under the original-HIPC Initiative, nor did it reachits decisionpoint under the enhanced-HIPC Initiative. The amounts of debt reliefshown are only indicative, basedon a preliminarydocument issued, and are not includedinthe totals. - 8 - 3. Maintainingmacroeconomic stability remainsa challengefor countriesthat are inthe interimperiodbetweentheir decision andcompletionpoints.Ofthe 13 countries inthe interimperiod, six are ontrack withtheir macroeconomicprograms. TheDemocratic Republic of Congo, Madagascar, Rwanda, and SierraLeone have made continuedprogressin the implementation oftheir Fund-andIDA-supportedprograms.Havingimplemented corrective measuresfollowing the expiration of the earlier PRGF arrangementsin2002 and 2003, respectively, Honduras and Zambia haveput inplace economic adjustment programs supportedby new PRGF arrangements. O fthe remaining seven interimperiodcountries, Cameroon, Chad, and Malawi have recently experienceddifficulties inprogram implementation primarilyinthe fiscal policy area andare pursuingmeasuresto bringtheir economic programs back on track (Table 2 and Annex 111).Restoringmacroeconomic stability inThe Gambia, Guinea, Guinea-Bissau, and SZio Tom6 andPrincipe will require strong efforts to address obstacles inpublic resourcemanagementand structural reforms. Creating a stable and favorable domestic environment remains apriority inGuinea-Bissau and S2o Tom6 andPrin~ipe.~Staffs ofthe FundandIDAhave continuedto assist macroeconomic managementand reform inthese countries through the implementation of FundStaff MonitoredPrograms(SMPs) andIDA-supported programs.Undertheir SMPs, Guinea has implementeda number ofmeasuresaiming at fiscal consolidation and The Gambia is strengtheningits public expenditure management.Progressunderthe SMPs will pavethe way for the resumption ofPRGF-supportedprograms inthese countries. 4. MostHIPCsinthe interimperiodhavepreparedtheir PRSPs.As ofend-June 2004, nine of the 13 HIPCs inthe interimperiodhadprepareda full PRSP and were making good progress intheir implementation. Siio Tom6 andPrincipe has already completed a full PRSP buthas not submittedit to the IDA and FundBoards pending further progress in macroeconomic stabilization andadjustment. 5. Serious institutionalandcapacityconstraintsare the mainfactors contributing to the delays inthe three countriesinthe interimperiodthat havenotyet completed their fullPRSPs.The Democratic Republic of Congo and Sierra Leone are experiencing the longest PRSP preparationtimes. Bothcountries were affected by conflict and suffer from weak administrative capacity anddifficulties inengaging stakeholders inthe broad participatory processneededfor the development o f a PRSP. The difficult political situation inGuinea-Bissauin2002-03 has delayedthe PRSPpreparationprocess. With significant progress made inthe first halfo f 2004, Sierra Leone and Guinea-Bissau are now expectedto complete their PRSP by end-2004. The completion of PRSPs followed by implementationin the subsequentyear should not impedeprogressinreachingthe completionpoint, provided that performance under Fund-and IDA-supported programs remains satisfactory. The presidentofGuinea-Bissau was removed after a coup d'6tat inSeptember 2003 andanew government was nominated on May 12. Political and social tensions have increased since the attempted coup d'ktat in SZo Tom6 and Principe inJuly, 2003 and have delayed discussions on an economic program that could be supported by a PRGF arrangement. - 9 - Table 2. HIPCs inthe Interim Period:KeyFactorsAffectingPolicyPerformanceinCountriesthat ExperienceDelays inthe ImplementationofPRGF-SupportedPrograms (As ofend-July 2004) Structural Reforms Exogenous Macroeconomic Policies (incl. on governance) Political/Security Factors Shocks Countrieswith interruptionddelays in PRGF-supported programs of less than six months Cameroon Weak non-oilrevenueperformance, Deteriorationofthe financial overruns incurrent expenditure, andnon- positionofsome state-owned paymentof scheduleddomestic public debt companies, includingthe obligations. nationalairline companyand thepostal savings bank. Malawi Expenditureoverruns financed by higher thanprojecteddomestic borrowing. Chad Weak revenueperformance, shortfallsin Delays inimplementation of external budgetarysupport, and the regulatory proceduresfor accumulationofexternalarrears. revenueelements. Countrieswith interruptions/delaysin PRGF-supported programs of betweenone and two years Guinea Shortfalls inrevenueand unprogrammed Securitysituation along Cumulative 16 expenditure overruns due to defense and borders deteriorated. percentdecline in election spending, weak budgetary bauxiteprices management.This was exacerbatedby an during2001-03. inappropriateincreaseincentral bank financingwhich was inflationary. The Gambia Expenditureoverruns due to debt service Seriousconcerns about data Border closureswith Major crop payments and revenueshortfallsrelatedto reportingand governance Senegal that impededtransit failure due to weak tax administration.Monetary issues relatedto the central trade and higher petroleum delayedrains. expansionwith credit growthfar inexcess banksreserves. prices. Countries with interruptions/delaysin PRGF-supported programs of more than two years Guinea- Loss of budgetarycontrol in2000, due to Large errors andomissions in Transition after 1999civil 30 percent Bissau expenditure overruns largelyon budgetexecution; measures to conflict has beendifficult. decline incashew unprogrammeddefensespending. Monetary address weaknesses inpublic Parliament dissolved in nut pricesin2001 expansionwith credit growth far inexcess resourcemanagementwere 11/02 andthe increased and adverse of targets. notobserved. political instability, which weather culminatedinacoup in conditions September 2003 and resultedinafall adversely affectedthe in economic decision-makingprocess. activity. S b Tome Expenditureoverruns in the civil wage bill, Governanceissues relatedto A coup inJuly 2003 and and Principe utilities and electioncosts. oil-sectorcontracts, and increasedpolitical delays inthe reformmeasures uncertaintyand adversely for the utility sector andthe affected the decision- civil service. makingprocess. - 10- 6. Movingforwardwith the remaining11countriesthat havenotyet reachedtheir decision pointshasbeendifficult.Nearly allthese countries have beenaffectedby conflict and several have large arrears to various creditors (Annexes I1andIII).4 These problemshave complicated the design and implementation of viable policy adjustment andreform programs.Notwithstanding these difficulties, some are making good progress inestablishing atrack record o f macroeconomic performance. A PRGF arrangement was approvedfor Burundiinearly 2004, and discussionsbetweenthe authorities andthe Fundstaff ona PRGF-supported program are underway inthe Republic of Congo. The Fundalso approved an Emergency Post-Conflict Assistance program for the Central African Republic inJuly 2004, which could lead to a PRGF-supportedprogram inearly 2005. B. ImpactofHIPC InitiativeRelief 7. The HIPCInitiativerelief committedso far to the 27 countriesthat haveeither reachedtheir completionpointsor are intheir interimperiod, together with other debt relief,representsa two-thirds reductionof the overall debt stock of these countries.In 2003 NPV terms, the outstanding debt stock of these countries would fall from about US$SObillion to US$26 billion after the deliveryoftraditional debt relief by bilateral creditors, assistance under the HIPC Initiative, and additional bilateral forgiveness (Figure l).' For the 14countries that havereachedtheir completion points, their debt stock has declinedfrom US$37 billion to US$12billion, or by about 67 percent inNPV terms.6 HIPC Initiative and associateddebt reliefis expectedto lower the NPV o f debt-to-exports ratio ofthe 27 countries to levels comparable to or lower thanthat o f other non-HIPC low- income countries and developing countries ingeneral (Annex IV). For an in-depthanalysis of the challengesfacing post-conflict countries, see "Assistance to Post-Conflict Countries and the HIPC Initiative," IMFC/Doc/3/01/7 andDC2001-0014, April 20,200 1, hm://www.imf.ordexternal/ndhitx and h#x//www. worldbank.ory/hipc/progress-to-datetpromess-to- date.htm1. Traditional debt relief refers to 67 percentNPV reductionsof pre-cut off date debtby officialbilateral and commercialcreditors (Naples terms). 6These calculationsare basedon the assumptionof full creditor participation. Financing assurancesalready obtainedfor these countries average approximately 90 percent oftotal required HIPC relief. - 11- Figure 1. Debt Stock Reduction (Inbillions ofU.S. dollars in2003 NPVterms) loo1 80 60 40 20 0 Before traditional After traditional relief After HLPC relief After additional relief bilateralrelief 27 decision point countries 14 completion point countries Source: HIPC Initiativecountry documents; and World BankandIMFstaff estimates. 8. The HIPC Initiativecontinuesto providesubstantialsavings interms of debt- service paymentsfor HIPCs. Interimassistance from key creditors starts flowing to HIPCs once they have reached the decision point, lowering their near-term debt-service payments. Compared with the 1998-99 averages, debt-service payments relative to exports andfiscal revenue inthe 27 countries that have reached their decision or completion points have declined from an average of about 16percent and 24 percent to 10percent and 15 percent in 2003, respectively. These ratios are projectedto decline further to less thanhalfo fthe 1998-99average by 2006 (Figure 2 andAppendix Tables 1A and lB).7The debt-service ratios of these countries inthe near term are below the average innon-HIPC low-income countries. An exception is the Democratic Republic o fCongo, where debt-service ratios rise significantly after the decision point. The increase is partly due to the resumption o fdebt-service payments following the arrears clearance operation, as the Democratic Republic o f Congo had not been servicing most o f its debt inthe previous period. -12- Figure 2. Debt-Service Ratios for the 27 Countries that have Reached Decision or CompletionPoints (Weighted average, inpercent) I I I I I I 1 I 1999 2000 2001 2002 2003 2004 2005 2006 I -w- Debtservice-to-exports ratio -A- Debt service-to-revenue ratio I Source: HIPC documents andFundstaff estimates. 9. Debt relief under the HIPC Initiative has helped countries to increase poverty- reducing expenditures, which on average have risen from 6.4 percent o f GDP in 1999 to 7.9 percent o f GDP in2003, a level about three times that spent on debt service (Figure 3).* Poverty-reducingexpenditures are expected to increase inall countries that are making steady progress inimplementing their PRSPs andare ontrack with their economic reform programs, with financing from increased domestic revenue and international assistance inthe form o fnew aid flows and debt relief (Appendix Tables 1A, 2A, and 2B).' The definition ofpoverty-reducing expendituresvaries acrosscountries, although many countries include primary educationandbasic health as well as expenditures for rural development. Country-specific definitions are included inAppendix Table 2B. Countryauthorities are puttinginplace public expendituremanagementsystems that would ensure the efficiency ofpoverty-reducing expenditures. See IMFand IDA "Update on Implementation of Action Plans to strengthen capacityo f HIPCs to Track Poverty-ReducingPublic Spending" (SM/O3/90,3/11/03) http://www.imf.orp;/externallnplhipc/; andMarch 11,2003, IDA SecM2002-30/2, http://www.worldbank.org/hipc. - 1 3 - Figure 3. Poverty-Reducing Expenditures and External Debt Service in27 Countriesthat haveReached Decision or Completion Points (Weighted average, inpercent of GDP) 10.0 8.0 2B 0 6.0 c1 a Q) E & 4.0 .4 2.0 0.0 1999 2000 2001 2002 2003 2004 2005 2006 I -A- Poverty-reducing expenditures -m- Debt service payments I Source: HIPC documents and Fundstaff estimates. Iv. UPDATE OF COSTS A. ProjectedCosts of HIPC InitiativeRelief 10. The cost of providingdebt relief underthe Initiativeto 37 countriesincluding Liberia,Somalia, and Sudanis estimatedat US$54.5 billionin2003 NPV terms, slightly higherthanearlier estimates." Therevisionintotal costs reflects mainlytopping-up assistanceto Niger and Ethiopiaapproved at their completionpoints and debt data updates for Liberia, Somalia, and Sudan.Nearly two-thirds ofthis amount has already been committed to countries that have reachedthe decision or completionpoint. The cost of potential debt reliefto Liberia, Somalia, and Sudanaccounts for two-thirds ofthe estimated US$18.9 billionfor pre-decision point countries (Table 4 andAppendix Table 3). loThe underlyingassumptions and caveatsare detailed inAnnex I. estimates do not include Angola, These Kenya, Vietnam, or Yemen, which are estimated to have debt ratios below the HIPC thresholds. Lao P.D.R. is not included due to uncertainty on debt data. The cost revisions from 2002 to 2003 N P V terms reflect the decline inthe SDR discount rate from 5.45 percent to 4.8 percent (reflecting the decline inworld interest rates). - 14- 11. The cost of assistanceis roughly equally divided between multilateral and bilateral creditors. IDA, the IMF, AfDB, andIDBaccount for aroundtwo-fifths of the total costs, withParis Club creditors accounting for nearly as much. Commitments alreadymade by multilateralcreditors reflect about 73 percentoftheir estimatedtotal costs; for official bilateral creditors, the comparative percentageis 59 percent. Commercial creditors account for about 5 percent ofthe total costs, which are concentratedinafew pre-decisionpoint countries (C6te d'Ivoire, the Republicof Congo, and Sudan). Table 3: HIPC Initiative: Distributionof EstimatedCosts by Main Creditorsand CountryGroups (Inbillions ofU.S.dollars, in2003 NPV terms) 11 DecisionandCompletionPointHIPCs(27) Pre-DecisionPoint HIPCs(10) Total Completion DecisionPoint Total Pre-Decision Liberia, Pointcases21 cases 31 PointCases41 Somalia, and Sudan5/ (37 countries) (14) (13) (27) (10) (3) Totalcosts 54.5 20.1 15.6 35.1 18.9 12.5 Bilateralandcommercialcreditors 29.4 9.3 8.2 11.4 11.9 1.9 ParisClub 19.0 6.0 7.1 13.1 5.9 3.0 Other official bilateral 1.6 2.8 0.7 3.5 4.1 4.0 Commercial 2.8 0.5 0.3 0.9 1.9 0.9 Multilateralcreditors 25.2 10.8 1.4 18.2 6.9 4.6 World Bank 10.8 5.3 3.2 8.5 2.3 1.2 ofwhich IDA 10.0 5.3 2.9 8.1 1.8 1.2 ofwhich IBRD 0.8 0.0 0.3 0.3 0.5 0.0 IMF 5.2 1.3 1.6 2.8 2.3 2.1 AfDB1AfDF 3.9 1.2 1.7 2.9 1.o 0.5 IaDB 1.3 1.1 0.2 1.3 0.0 0.0 Other 4.0 1.9 0.8 2.7 0.4 0.9 Memorandum: percent of total cost 100 # 36.8 28.6 65.4 34.6 23.0 Source: County authoritiesand staffestimates 11All HIPCs, excludingpotentially sustainablecases(Angola, Kenya, Vietnam, and Yemen). Lao P.D.R. is not includeddue to data uncertainty. 21Benin, Bolivia, BurkinaFaso, Ethiopia, Ghana, Guyana,Mali,Mauritania,Mozambique,Nicaragua, Niger, Senegal, Tanzania, andUganda. 3/ Cameroon, Chad, Gambia, Guinea, Guinea-Bissau, Honduras, Madagascar, Malawi, Mauritania, Rwanda,Sa0 Tome andPrincipe, Tanzania andZambia. 4/ Burundi, CentralAfrican Republic,Comoros, Congo Rep.Of, Cote d'Ivoire, Liberia, Myanmar, Somalia, Sudan, and Togo. 51No provisionwas made for Liberia, Somaliaand Sudaninthe resources mobilizedfor the PRGF-HIPCtrust Fundin 1999. B. Potential Costs of Topping Up 12. Additional debt relief beyond that committed at the decision point has been committed to three countries (Burkina Faso, Niger, andEthiopia) at their completion points. Total topping-up relief to these countries amountsto US$978 million inNPV terms. At present, 7 ofthe 13 countries inthe interimperiodare projected to have external debt in excess of the HIPC Initiativethresholds, which would sum upto a total of around US$l.1 billion in2003 NPV terms (see Appendix Table 5). Inno case should an estimate indicatingthat a country is projected to have external debt above the thresholds under the - 15- HIPC Initiative be taken as an expectationthat it would be eligible to receive topping-up assistance. These countries' eligibility for topping up will dependon a comprehensive assessment to be made at the completion point basedon actual debt and other data. V. CREDITORPARTICIPATION A. MultilateralCreditors 13. Twenty-threeof the 30 multilateralcreditorsof HIPCshaveindicatedtheir intentionto participateinthe enhancedHIPCInitiative,representingmorethan 99 percento f the total exposureto these creditors. Large multilateralcreditors, including IDA,the IMF, AfDB, andthe IDBhaveprovidedreliefto most countries inthe interim period. Ofthe remaining multilateralcreditors, seven small creditors have not indicated their willingness to participate inthe Initiativedue mainly to financial constraints (Appendix Table 6)." 14. IDA'Sfinancingneedsfor HIPC debt reliefto the 27 countriesthat havereached decisionpointhavebeenmetthroughthe IDA-13period(see Box 1). As ofend- June 2004, IDAhas delivereddebt reliefinan amount ofUS$2.9 billion innominalterms to the 27 decision point HIPCs, includingUS$2.4 billiondeliveredto the 14completion point countries (Appendix Table 7A). Interimdebt reliefis beingprovidedby IDA to all remaining countries inthe interimperiodwith the exception of Cameroon and Honduras where the cumulative limit for interimrelief of one-third ofthe total NPV o freliefhasbeenreached. Prior to reaching completionpoint, the cumulative limit was reachedinSenegalinSeptember 2003 and it is expectedthat The Gambia will do so inDecember 2004. IDA staffis preparing a note for the consideration of its Boardthat reviewsthe IDA policy on interimreliefand clarifies procedures for extending and discontinuing interimassistance. 15. The totalcost to the Fundis estimatedat US$5.2billion(2003 NPV terms), of which US$2.8 billionare for the 27 countriesthat havereachedtheir decisionor completionpoints.The Fundhas already committedto providethe latter infull; this amounts to SDR 1.8 billion on a cashbasis. O fthis, SDR 1.3 billion inHIPC reliefhas already beendeliveredinthe form of grants (Appendix Table 8A). Grantresources inthe PRGF-HIPC Trust are estimatedto be sufficient to cover the costs o f debt reliefcommitted so far and expectedinthe near term. However, additional resources inthe amount of US$2.1 billion will be neededto enable the Fundto provide HIPC debt reliefto Liberia, Somalia, andSudanshould they become qualifiedfor such assistance. l1 ofprovidingdebtreliefforthesecreditorsrepresentsanestimated0.5percentoftotalcosts.While Costs previously committing to participation inthe HIPC Initiative, the East Afiican Development Bank(EADB) has recently agreedto deliver its share ofHIPC debt reliefto Uganda. Also, the Fondo Centroamericano de EstabilizacionMonetaria (FOCEM) has recently engaged inpreliminary discussions with Nicaraguan authorities about its participation inthe HIPC Initiative. -16- 16. The AfDB and IDB have been providing interim relief to HIPCs.As of end 2003,the ADB has deliveredUS$675 million in relief to 23 countries underthe HIPC Initiative. The ADB has reached its cumulativelimit for interim assistance of percent of total debt relief 40 commitmentin NPV terms to Cameroon, The Gambia, Guinea, Madagascar, and Zambia. Between 1998and 2003, the IDB deliveredUS$468 millionto Bolivia, Guyana, Honduras, and Nicaragua andstoppedprovidinginterim relief to Hondurasin 2002 when one-thirdof the debt relief committedhad been delivered. B. Official Bilateral Creditors 17. Since September2003, ParisClubcreditors have agreed to delivertheir shareof debt relief committed under the HIPC Initiative to Nicaragua,Guyana,Ethiopia, Niger, Senegal and Ghana at their completion points through debt-stockreduction.In addition, they agreedto provide topping-up assistanceto Niger in line with the relevant decisionof the Boards of IDA and the Fund.' ParisClub creditors have continued to provide interim assistance to the HIPCsthat are in the interimperiod andhave remained on track with their PRGF- supportedprograms. Total commitments madeby Paris Clubcreditorsso far amount to about US$13.1 billion inNPV terms (Appendix Table10A).Most Paris Club creditorshave committed to additionaldebt forgiveness(up to 100 percent cancellation)over and beyond the enhanced HIPC Initiative(AppendixTable 11). 18. Therehave been no majorchanges in the status of participationby non-Paris Club creditorssince September2003. Of the 5 1 non-Paris Club officialbilateral creditors, 10 have indicated commitmentsto delivertheir share of debt relief underthe HIPC Initiativeand 19 have made commitmentsto deliverHIPC Initiativerelief on some claimson HIPCs. The remaining 22 (accountingfor about 21 percent of the costs to the non-Paris Club officialbilateralcreditors) have not yet agreedto provide their shareof HIPCrelief (Appendix Tables 12A andB). As of end-July 2004 non-Paris Club official bilateralcreditorshave delivered31percent of their share of HIPC relief to the 8 countriesthat had reachedthe completionpoint by September2003. To facilitatecreditorparticipation,staffsof the Bank and Fundhave recentlylauncheda survey aimingto update the status of debt relief commitments anddeliveryby non-Paris Club creditors. 1ParisClub discussions on the provision of topping-up relief to Ethiopia are ongoing. - 17- ~~~~ ~~~ Box 1. IDA'SHIPC Trust Fund The HIPC Trust Fund, established in 1996 at the commencement o fthe HIPC Initiative, has beenan important vehicle for the provision o f financial assistanceto support HIPC debt relief being delivered by IDA and eligible regional and sub-regional multilateral creditors. The Trust Fundhastwo components: the first is for finds provided to reimburse IDA for HIPC debt relief. The second uses contributions from donors to support HIPC debt reliefbeing provided by eligible regional and sub- regional multilateral creditors (Appendix Table 9). The HIPC Trust Fundhas to date reimbursed IDA for the debtrelief ithas providedto the 27 decision point countries. Fundingfor this has primarily come from the Bank`s net income transfers to the IDA component o f the HIPC Trust Fund. Total Bank net income allocations to the HIPC Trust Fundhas so far beenUS$1.9 billion. But, resources available to IDA inthe HIPC Trust Fundare expected to be exhaustedbythe first year ofthe IDA-14 period. Donors have reaffirmed that the costs o f financing HIPC debt relief should not damage IDA'Sfinances. The IDA deputies have decidedthat IDA'SHIPC debt relief costs will be addressedinconjunction with the IDA-14 replenishment discussions. Without new funding, about US$ 1.9 billion (equivalent to SDR 1.3 billion) inIDA debt relief costs would remain unfindedover the IDA14 period (FY2006-08). Donors have pledged a total o fUS$3.4 billionto the HIPC Trust Fundto support eligible regional and sub-regional creditors, andhave already contributed more than US$2.9 billion. Disbursements to eligible regional andsub-regional creditors now total over US$l.8 billion, includingUS$557 million duringFY04. The largest recipient is the African Development Bank with atotal ofUS$l.2 billion from inceptionthrough June 2004 (see table below). The financing requirements o fthe HIPC Trust Fundare subject to considerable uncertainty surrounding the timingand level o f debtrelief required for countries that have not yet reached their decision points, and the level o ftopping up that may be approved. A HIPC technical meeting will be held inearly October 2004 back-to-back with the IDA-14 replenishment meetingto review the HIPC Trust Fundfinancing requirements. Recipientsof HIPC Trust Fund Resources Statusas ofJune 30,2004 (InmillionsofU.S. dollars) Creditors Amount As of June As ofJune 30,2003 30,2004 Total 1,229.4 1,788.7 African Development Bank Group 948.2 1,177.5 Inter-American Development Bank 84.3 148.9 Central American Bank for Economic Integration 81.9 308.5 Corporacion Andina de Foment0 55.6 55.6 West African Development Bank 24.9 37.2 Fundfor the Financial Development o fthe River Plate Basin 18.7 18.7 Nordic Development Fund 3.6 5.9 International Fundfor Agricultural Development 9.7 33.9 Caricom Multilateral Clearing Facility 2.5 2.5 Source: IDA. - 18- C. CommercialCreditorsandCreditorLitigation 19. While debt relief from commercialcreditorsrequiredunderthe Initiative accounts for just 5 percentof HIPC debt relief, mostof suchcreditorshavenot providedtheir share of traditionalandHIPC debt relief to HIPCs.As such, non-delivery of debt relief can substantially affect HIPCs' debt outlook. Moreover, severalcommercial creditors have putpressureon HIPCs to settle claims by resorting to litigationandother unilateral actions. 20. The DebtReductionFacilityfor IDA-only countries(the Facility)hasbeenan importantinstrumentinreducingcommercialdebt owedby HIPCs.I3The IDA Board in July 2004 approved an enhancementofthe Facility including, inter aZia:14(i) extending the facility by three years; (ii) consolidating buy-back operationsbetweenHIPCs where cost effective; and (iii) providing a discount underthe operation of no less thanthe combined effect of the provisionof traditional andHIPC relief. Inaddition, the IBRDBoard has recommendedto its Board of Governors that they approve atransfer of $50 million from FY04IBRDnet income to support areplenishmentof resourcesfor the DebtReduction Facility for IDA-only countries. These measures will assist inbuyingback at a discount a portionof the remaining US$2 billion commercial credits indecision point countries. 21. Inmany instances,commercialcreditorsandsome non-ParisClub official bilateralcreditorshave resortedto litigationor threats of litigationto recover their debt." To monitor creditor litigationagainst HIPCs, staffs have conducted a follow-up to the August 2003 survey ofthe 27 HIPC governments for countries that had reachedthe decision point. Ofthe 19 governments responding to the survey, 10indicated that they were not facing any lawsuits. Nine respondedthat they were facing litigationon claims heldby commercial creditors andtwo non-Paris Club creditors (Table 4). These survey results are similar to last year's results, with the key changesbeing the conclusion or withdrawal o ftwo cases-Red Mountain vs. the Democratic Republic of Congo and BanqueBelgolaise vs. Niger. Although inmany cases debtorshave notmadepaymentsoncourtjudgments obtainedby creditors, in some cases debtors have made payments inexcess o fHIPC parameters. Pending litigation and outstandingcourtjudgments may also inhibit HIPCs from regularizing financial relationships with the international banking community. l3Since 1989, the Debt Reduction Facility for IDA-only countries (the Facility) has supportedoperationsand provided technical assistanceto 20 o fthe 27 decision point HIPCs (21 operations) retiringabout US$4.1 billioninprincipal andUS$3.4 billion of associatedinterest due to commercial creditors. l4See The World Bank "Debt Reduction Facility for IDA-only Countries-Progress Review, Supportto the HIPC Initiative and ProposedEnhancements" (IDklR2004-0 184), June 28,2004. l5Threats ofcreditor litigation have beenleveled againstHIPCs, including such cases as Greganti Secondo, ARCADE, and IndustrieBiscoti against Sierra Leone, Cote d'Ivoire's threat againstBurkina Faso, and Yogo import-SDPRagainstEthiopia. - 19- Table 4: Creditors Involved in Litigation Against HIPCs Creditor 1151 Original claim 2/16 Domicileof HIPC debtor (millions of U.S. Judgment for creditor creditor 3141 dollars) Status of legalaction (millions ofU.S. dollars) WinslowBank Bahamas Cameroon 8.9 Judgementto pay 51.5 DelFavaro Sua Italy Cameroon 2.9 Judgementto pay 4.9 ENERGOINVEST Former SFR Congo, D.R. 55.8 hdgement to pay 74.9 Yugoslavia Kintex Bulgaria Ethiopia 8.7 Uncertain LaboratoriesBag0 Argentina Honduras 1.45 Pending Yugoimport FormerSFR Mozambique 10.9 Pending Yugoslavia LNC Investments us. Nicaragua71 26.3 Judgementto pay 87.1 GPHemisphereAssociates - Nicaragua71 30.9 Judgementto pay 126.0 Van Eck EmergingMarkets us. Nicaragua71 13 Judgementto pay 62.5 Export-ImportBank Taiwan Niger 60.0 Judgementto pay 72.3 Republicof China J&S FranklinLtd U.K. SierraLeone 1.2 Judgementto pay, Sierra 2.1 Leonehaspaid US$2.0 million. UMARCO France SierraLeone 0.6 Pending; SierraLeone has paidUS$O.l million. ExecutiveOutcomes, United States SierraLeone 19.5 Pending; SierraLeone has InternationalInc. paidUS%l.lmillion Chatelet InvestmentLtd. SierraLeone SierraLeone 0.4 Pending __ Scancem International Norway SierraLeone 3.7 Out ofCourt Settlement, 3.7 SierraLeonehaspaid US$0.9million. BancoArabe Espanol Spain Uganda 1.0 Judgementto pay; payments 2.4 ongoing TransroadLtd U.K. Uganda 3.9 Judgementto pay 8.3 Industry ofConstruction Former SFR Uganda 7.0 Judgementto pay 8.9 Machinery andEquipment Yugoslavia Sours FabFamousRz Promet FormerSFR Uganda 0.3 Judgementto pay; payments 1.4 Yugoslavia ongoing IraqFundFor External Iraq Uganda 6.0 Judgementto pay 6.4 Development ShelterAfrique Kenya Uganda 0.9 Out of courtsettlement 0.1 Grand Total 263.4 513.1 Source:HIPCauthorities -- Indicates nodata provided. 1/ Guyana-BigFoodGroupPIC.withdrew its lawsuit in2003 andan agreementwas reachedresultinginawrite down of atotal of approximately US$23.8million ofGuyana'scommercialdebt. 21The following exchangerates wereusedin cases where amountswere not given inUS dollars; 537.150 CFA Franc=US$l; 0.5460UKPound Sterling=US$l;0.8190Euro=US$l. 3/ The following 10 countriesreportedhaving no creditorlawsuits: Benin, Bolivia, Chad, The Gambia, Ghana, Guinea-Bissau, Guyana,Madagascar,Malawi, and Tatlzania. 4/ The following 8 countrieshave not reportedupdated informationas ofJuly 2004: Guinea, Mali, Mauritania,Nicaragua,Rwanda, SBo Tome and Principe, Senegal, andZambia. 5Either original creditoror holder ofcurrentclaim. 6Excludesaccumulatedinterestand charges. 7iDataobtained from September2003, Status ofImplementation,Table 7. - 20 - VI. OTHERHIPC INITIATIVEISSUES A. Extensionof the Sunset Clause 22. A sunset clausewas includedinthe HIPCInitiative to preventthe Initiative from becominga permanentfacility, minimizemoralhazard,and encourage the early adoptionof programsof reform.16This clausehas beenextendedthree times since the HIPC Initiativewas launched in 1996.Currently, 11potentially eligible HIPCshave not yet reachedtheir decision points andhave estimateddebt levels inexcess o f HIPC Initiative thresholds. O fthese countries, five have not had a Fund-supported economic program since 1995.17Inview of the complexities involved, Directors of IDA andthe Fundrequested suggestions from the staff on alternative options for dealing with the sunset clause this time (see below). 23. The Fund and IDA Boardsdiscussed a paperjointly preparedby the staffs in July 2004." Four options were presented: (i) the sunset clausetake effect at end-2004 letting (Option 1); (ii) extending the sunset clause by another two years (Option 2); (iii) extending the HIPC Initiativefor five years solely for countries meeting predefinedcriteria to reachthe decision point (Option 3); and (iv) limiting debt subject to debt relief underthe HIPC Initiative using a cutoff date of end-2004 (Option 4). Directors rejected Option 1.Most Directors were infavor o f atwo-year extension on the groundsthat itprovides an opportunity for the remaining countries to benefit from HIPC Initiativereliefand avoids modifications ofthe Initiative associated with Options 3 and4. A number o f Directors who preferred Option2, however, favored an extension applying only to the current list of potentially eligible HIPCs to minimize adverse incentives andto limit the Initiative. Some Directors consideredthat atwo-year extension may be insufficient andpreferred a five-year extension (Option 3). There was no support for Option4. Managementsandstaffs were to reflect further on the way forward andto submit proposalsfor approval by the Boards inthis HIPC Initiative progressreport. l6The 1996 HIPC Initiative Program o f Action stated that "the Initiative would be opento all HIPCs that pursue or adopt programs o f adjustment and reform supported by the IMFand IDA inthe next two years, after which the Initiativewould be reviewed anda decision made whether it should be continued." See "A Program for Action to Resolve the Debt Problem for HIPCs-Draft Report o fthe Managing Director o f the IMFandthe President o fthe World Bankto the Interimand Development Committees" (EBS/96/152,9/17/96) and SecM96- 975. Underthe sunset clause, IDA-only and PRGF-eligible countries need to have adopted a program o f adjustment andreform supported by the Fundand IDAby end-2004 to be eligible for assistance under the Initiative; there is no deadline for eligible countries which, after the application o f traditional debt relief mechanisms, qualify for assistanceunder the Initiative to reach the decision point. l7Thesefivecountriesare Comoros, Liberia, Myanmar,Somalia, andSudan. l8 footnote2. See - 21 - 24. The staffs see the following points as key factors which should shape any decision: There is no realistic prospect for the remaining countries to adopt Fund-/IDA- supported programs to meet the requirementsof the current sunset clause. The enhancedHIPC Initiativeis anagreedframework for comprehensive debt relief, and so the objective should beto try to bringwithin the Initiative all PRGF- eligible/IDA-only countries with current unsustainabledebts after the full use of traditional debt-relief mechanisms. The Initiativewas intendedto bea temporary mechanismto deal with current unsustainabledebts, not a permanentfacility to provide a remedy for future debtbuild upfor anunlimitedgroup ofcountries. Preventionoffuture buildup ofunsustainable debts should be helpedby the framework for low-income countries' debt sustainability. Any limitationon eligibility underthe Initiative should respectthe principle of uniformity oftreatment and be basedonthe application of criteriarelevant to the Initiative. Applyingthe extension only to a specific list of countries would be inconsistent with this principle and would entail a changeto the Initiative's architecture.l9 25. Inthe light ofthese considerations and the views ofDirectors, the staffs propose that, as it has been done previously, the existing sunset clause be extended for a further two years through end-2006. Such an extension would provide more time for countries to meet the HIPC eligibility requirements. 26. However, Directors could consider a modification of the extension that would involve ring-fencing countries eligible for the Initiative utilizing criteria establishednow. Specifically, the only countries that would be consideredfor anextension would bethose that meetthe HIPC Initiative's income criteria (IDA-only andPRGF-eligible) and indebtedness criteria (external public debt exceeding the enhancedInitiative thresholds after full application o ftraditional debt relief mechanisms) at some point intime.20There are two possibleways inwhich this can be done: 0 First, the two-year extension couldbemodifiedto limit eligibility to a set of countries usingincome andindebtednesscriteria that are applied basedon end-2004 data. It would also require an amendment to the Fund's PRGF-HIPC Trust Instrument. *'The income and indebtedness criteria for eligibility are specified in"The HIPC Debt Initiative-Elaboration ofKey Featuresand Proposed Procedures," (EBS/96/135,8/26/96 and IDA SecM96-927, August 26, 1996). - 22 - Under such anoption, staffs wouldpreparealist ofcountries meetingthe criteriaby mid-2005 together with the cost implications basedon end-2004 data. or 0 Second, Directors could decide that the income and indebtedness criteria should be applied basedon end-2006 data. Insuch an instance, the staffs would produce a list of countries, together with cost implications, for approval of the Boards bymid-2007. Inall cases, countries would (as now) receive debtreliefunder the Initiativebasedontheir level of debt on reaching the decision point. B. The Analysisfor ToppingUp 27. Duringthe Boarddiscussions onNiger andEthiopia'scompletionpoints, Directorscalledfor astrengtheningof the analysisand rationalefor toppingup in future completionpoint documentswheretopping upis beingproposed, particularly on whether changes indiscount rates andunanticipatednewborrowingduringthe interimperiod can be considered exogenousfactors giving rise to a fundamental change ina country's economic circumstances.21A number of Directors expressedconcernthat, inthe cases of Niger andEthiopia, staff didnot provide sufficient evidencethat changes inthe discount rate fundamentally affected the debt sustainability outlook o fthese countries. 28. A country-specificanalysisis requiredunderthe existingframeworkto assess the case for toppingup?2The impact ofinternational interest rate changes on aHIPC's economic circumstances will thus continue to be assessed case by case.23To strengthenthe 21The Acting Chair's Summing Up, Niger-Enhanced Initiative for HIPC-CompletionPoint, Executive BoardMeeting04/34 (BUFF/04/70,4/9/04) andThe Acting Chair's Summing Up, The FederalDemocratic Republic ofEthiopia-Enhanced Initiative for HIPC-Completion Point Document Executive Board Meeting 04/39 (BUFF/04/80,4/22/2004). Chairman'sSumming up, Republic ofNiger - Completion Point Document for the EnhancedHIPC Initiative, Meeting ofthe Board ofExecutive Directors ofIDA, IDNSecM2004-0213, April 9,2004 and Chairman's Summing up, Ethiopia - Completion Point Document for the EnhancedHIPC Initiative, Meeting ofthe Board of Executive Directors of IDA, IDNSecM 2004-0269, April 29,2004. 22 See IMF and World Bank"Enhanced HIPC Initiative-Completion Point Considerations" (EBS/OM41, 8/20/01), hm://www.imf.org/external/nu/hiuc/doc.htmandIDA/SecM2001-0539/1, August 17,2001, http://www,worldbank.org/hipc/hipc-review/Completion-Point-Consideration.pdf. 23 After the issuance of the completion point document for Niger, a Fund staff note onthe informational content of the CommercialInterest ReferenceRate (CIRR) Discount Rate was issuedto the Boardofthe Fund (FO/Dis/04/25, 3118/04). The note maintainsthat changes inindustrial countries' interest rates reflect changed inflation expectationsand hence are expectedto affect the ability ofHIPC countriesto servicetheir debt. It providesempirical evidence ofa positive correlation betweenCIRR andprices ofthe principalexportsas well as betweenCIRR and export volumes ofHIPC countries. While the staffnote provides relevantempirical evidence supportingthe view that changes indiscountrates could affect the economic circumstances of HIPCs, eachfuture topping-up case will have to bejudged basedon a country-specific analysis. (continued) -23 - analysis at the completion point, staffs suggest that infuture topping-up cases, medium-term projections, includingthe outlook for the mainprices ofthe exports ofthe HIPC concerned, be carefully assessedbasedon available evidence andthe analysisbereported inthe completion point document. Staffs also suggest that a thorough analysis be provided, where relevant, on new borrowingtriggered by unforeseendevelopments inthe completion point document. For instance, ifanunexpectedshortfall ingrants i s a key factor leading to the higher-than-expected newborrowing, the staffteam would contact the donors concernedto ascertainthe reasons for the shortfall andthe prospects for future financing. VII. DEBTAND DEBT SERVICE INPOST-COMPLETIONPOINTCOUNTRIES 29. This chapter provides an update of key debt indicatorsinpost-completion point countries.24The NPV of debt ratios have climbed for most post-completion point countries since the completion point. On average, the NPV of debt-to-exports ratio as of end-2003 was higherby 40 percentagepoints for countries with a2001 completion point referenceyear and by 19percentagepoints for countries with a 2002 referenceyear (Table 5). Thethree HIPCs that qualified for debt reliefunder the fiscal window have experienced an average increasein their debt-to-fiscal-revenue ratio ofabout 30 percentagepoints. Most ofthe increaseis dueto interest andexchange rate changes while highexports lowered the debt ratio significantly (Table 5). 30. Debt-service ratios for the post-completion point countries have also increased somewhat from completion point projections, but remain close to 10 percent on average.25The low level o f debt-service ratios reflect the impact of HIPC debt relief andthe highconcessionality of new debt. The average change inthe debt indicators masks important differences across countries (Annex I1Table 3). 31. Medium-term projections for the NPV of debt and debt-service ratios in post- completion point countries point to a stable or declining trend. The updatedprojections ofNPV of debt ratios are broadly inline with the completion point projections insix countries (Benin, BurkinaFaso, Mali, Mauritania, Nicaragua, and Senegal). For another two countries (Mozambique and Tanzania), the NPV of debt-to-exports ratios are expectedto be higherthanearlier projections butwell below 130percent over the mediumterm. Inthe cases of Bolivia, Guyana, Niger, andUganda, the updated projections show substantial upward 24Ghana and Ethiopia are not included inthis review becausethe recent completion point documents contain the latest available information. The assessmentis based on updates o fthe completion point debt sustainability analysis (DSAs) taking into account exchange and discount rates prevailing in2003, and the volume o fnew borrowing since the completion point reference year. The estimates assume full creditor participation and additional bilateral relief where applicable. 25Since the decline inthe discount rate has no direct effect on debt-service obligations, the increase inthe debt- service ratios is less pronounced than for the NPV o fdebt ratios. - 24 - deviations from the completion point projections. Uganda andNiger have pursuedstrong macroeconomic policies inthe recent past. Moreover, with the exception of Bolivia, debt service-to-export ratios inthese countries are close to 10percent.26These factors may help mitigate the risk of debt distress. Table 5. Change in Debt Ratiosfrom CompletionPoint Reference Year to end-2003: Decomposition of Contributing Factors 1/ (Percentage Points) Contributing Factors Reference Anticipated Unanticipated Current Year NPV Export/Fiscal New NewBorrowing Discount Exchange Estimate NPV Ratio Revenues5/ Borrowing 6/ 7/ Rates 8/ Rates 9/ Ratio 2001 Export Cases 2/ 135 -29 30 0 23 17 176 2002 Export Cases 3/ 145 -19 17 1 18 12 173 Fiscal Window Cases 4/ 188 -18 12 1 15 20 218 Source: CompletionPointdocuments; and World Bank and Fundstaffestimates. 1/Simpleaverages. 2/ Countries included:Benin, Bolivia, Burkina Faso, Mali, Mozambique,Tanzania, and Uganda.Uganda's completionpointreferenceyear is end-Junel999, butend-June2001 data is usedfor this analysis.Mozambique'sreferenceyear is end-2000, but end-2001data is usedfor this analysis. 3/ Countries included: Niger andNicaragua. 4/ Countries included: Guyana, Senegaland Mauritania. 5/ This columnreflects the contribution o fthe change inexportshevenuesfrom the completionpoint to end-2003. 6/ Anticipated changes refer to changes innew borrowingthat were projectedat completionpoint. New borrowing shown is gross new borrowingnet o famortizations. 7/ This column reflects only the contribution ofnewborrowingbetweenthe completionpoint andend-2003 that was unanticipatedat the completionpoint. 8/ This column reflectsthe change inNPV ofdebtdueto discountrate (the average6-month CIRR) changes betweenthe completion point andend-2003. 9/ This columnreflects the change inNPV o fdebt due to changes inthe US dollar exchangerate and other majorcurrencies betweenthe completionpoint and end-2003. 32. This review hasa number ofimplications.First, debt anddebt service indicators in post-completion point countries have deviated from earlier projections, insome cases significantly, reflectingthe impact o f domestic economic policies and exogenous developmentsbeyondtheir control. Second, despite their highvulnerability to shocks, the build-upofunsustainable debt is preventable, dependingimportantly ongovernance, economic policies including debt management, andthe terms of external financial assistance. Third, maintaining long-termdebt sustainability will require persistent effortsby HIPCsand their international supporters. Inthis regard, closemonitoringusingthe debt sustainability analysis framework for low-income countries will help strengthen debt management. Sucha 26Boliviahas a large domestic debt mostly denominated inU.S. dollars, and this is being taken into account by the government inits debt sustainability analysis. - 25 - framework would need to take into accountthe quality of economic institutions andpolicy implementation, domestic debt, andvulnerability to exogenous shocks. VIII. ISSUES FORDISCUSSION Sunset Clause.Do Directors agreeto extendthe sunset clause under the enhancedHIPC Initiative by a fiwther two years through end-2006 as they have inthe past?Alternatively, if Directors wish to modify the two-year extension, do they want to ring-fence application to IDA-only/PRGF-eligiblecountries that have not yet benefitedfrom HIPC debt reliefandare assessed to have external public debt inexcess ofthe enhancedHIPC Initiative thresholds after full application of traditional debt-reliefmechanismsbasedon end-2004 or end-2006 data? Creditor participation.Do Directors have any further suggestionsto encourage creditor participation by multilateral, bilateral, or commercial creditors? - 26 - ANNEX I Annex ICountryCoverage,DataSources, andAssumptions for the HIPC Costing Exerciseandthe Post-CompletionPointDebtRatioUpdates A. HIPC CostingExercise 1. CountryCoverage 0 The costing analysis is basedon 37 HIPCS:Benin, Bolivia, BurkinaFaso, Burundi, ~ ~ Cameroon, the Central African Republic, Chad, Comoros, Democratic Republic of Congo, Republic of Congo, C6te d'Ivoire, Ethiopia, The Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nicaragua, Niger, Rwanda, Si20 Tom6 and Principe, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, andZambia. 2. DataSources 0 Enhanceddecision and completion point documents for the following 27 countries: Benin, Bolivia, BurkinaFaso, Cameroon, Chad, the Democratic Republic of Congo, Ethiopia, The Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, SGo Tom6 and Principe, Senegal, Sierra Leone, Tanzania, Uganda, and Zambia. 0 For the remaining countries, the estimatesof the cost ofHIPC assistanceare basedon preliminary debt figures from creditor statements andother additional sources. 3. Assumptions for the HIPC CostingExercise 0 Calculations oftotal costs include costs underthe originaland enhancedHIPC Initiative frameworks, includingassistancethat has already beendelivered. 0 Cost estimates are basedon debt data after full use of traditional debt-relief mechanisms. 0 All countries consideredinthis costing exercise are assumedto request assistance underthe enhancedHIPC Initiative. 27 Yemen was excluded from the costing exercise because its level o f indebtedness, after full use o f traditional debt-relief mechanisms, was found to be below the HIPC thresholds. Angola, Kenya, and Vietnam were excluded becausetheir debt ratios were expected to be below the thresholds after application o ftraditional debt-relief mechanisms. Lao P.D.R. is not included inthe cost estimates because o f uncertainty on the terms o f rescheduling arisingfrom an agreement with Russia on the former Soviet Union debt that has not yet beenresolved. - 27 - ANNEX I 0 The total cost of assistanceto the Democratic Republic of Congo includes relief provided by bilateral and commercial creditors on short-term debt inarrears. 4. Updateof CostEstimatesinNetPresentValue Terms 0 The cost o f HIPC assistance calculated inNPV terms at the time ofthe decision point was increasedeachyear after the decisionpoint year by the average interest rate applicable to the debt relief. This rate was estimatedas 4.8 percent and corresponds to the implicit long-term interest rate ofcurrenciesthat comprise the SDR over the period 2001-03,calculated as an average ofthe average CommercialInterest ReferenceRate (CIRR) over 2001-03 weighted by the participationofthe currencies inthe SDRbasket. B. Post-CompletionPointCountryDebtRatioUpdates Themainobjective of Chapter VI andthe post-completion point country notes is to compare debt-ratio estimates calculated at the time ofthe completionpoint with current estimates(Le., end-2003), and highlightthe reasonsfor the changes. The results are indicative only and should not beviewedas a substitutefor a formal debt sustainability analysis (DSA). 5. Countiy Coverage e The analysis is basedon 12 countries: Benin, Bolivia, BurkinaFaso, Guyana, Mali, Mauritania, Mozambique, Nicaragua, Niger, Senegal, Tanzania, andUganda 6. DataSources andAssumptions 0 The underlyingdata used for the updates covers the total external public andpublicly- guaranteeddebt ofthe above-mentioned countries. The data is obtained from the completion point loan-by-loan databases that have been reconciledbetween the country authorities andtheir respective creditors prior to the completionpoint. These databases include completionpoint assumptions regardingthe deliveryo f HIPC debt relief by creditors, which are retained inthe updates.Note, however, that actual delivery of HIPC debt relief since the completion point may differ from the completionpoint assumptions regardingsuch delivery. Consequently, the updates should not be considered formal DSAsandwill vary from the results o f other DSAs that use different, andoften more precise, assumptionsonthe delivery schedule of HIPC relief. e The updates are basedon informationon exchangerates and currency-specific discount ratesprevailing at end-2003 that have been applied to the stock o f debt existing at the time o fthe completion point, borrowing since the completionpoint, andprojectednewborrowing. - 28 - ANNEX I 0 The updates utilize updated export andfiscal revenue projections, aggregated actual new borrowing that has taken place from the completion point reference year to end-2003, andupdated medium-term projections o f new borrowing from the respective IMF country staff reports are also used. 7. Caveats 0 While the updates are comparable to completionpoint debt-ratio estimates, the results may be less accurate than a full DSA based on detailed creditor-by-creditor reconciliation and the latest informationon the delivery o f HIPC andadditional bilateral debt relief. Moreover, the results are sensitive to the exchange and discount rates used. For example, usinga single discount rate as is done inthe application o f the new low-income country DSA framework template rather than currency-specific discount rates as done inthese updates can have a significant impact on the results. - 29 - ANNEX I1 Table 1. HIF'C Initiative: Progressin Implementationof Countriesbetweenthe Decisionand CompletionPoint Status as of July2004 Country Progressindevelopment and implementationof Actual DP ,xpectedCI PRSP Performance under PRGFsupported programs Date 1/ Date 1/ 2/ Cameroon The full PRSP was endorsedby the Boardsat end-July The 4th review underthe PRGFarrangementwas completedin Oct-00 Q1 2005 2003.The first PRSPprogressreporthas been December2003. The programwas extendedthroughDecember20, submittedto the World Bankandthe IMF inJuly 2004. 2004. Dueto fiscalpolicy slippagesthe completionofthe 5th review has been delayed. Chad The full PRSPwas discussedby the Boardsin The 5threview underthe PRGF arrangementwas completedinJuly May-Ol Q3 2005 November2003. The first annualPRSP implementation 2003.The 6th review could not becompletedbeforethe program reviewis expectedto be completedby November2004. expiredinJanuary2004. A numberofperformancecriteria were outstanding. Congo.Dem. Rep. 01 The I-PRSPwas presentedinJune 2002.The full PRSP The 4th review of the PRGFsupportedprogramwas completedin Jul-03 Q3 2006 is expected in thethird quarterof2005. July 2004.The 5th review is expectedinJanuary 2005. Gambia. The 31 The full PRSPwas presentedto the BoardsinJuly 2002. The PRGF, approvedinJuly 2002, is off-track dueto fiscal and Dec-00 QI 2006 The 1stannual progressreportis expectedinthe third monetarypolicy slippages, misreportingand governanceissues. quarterof2004. Guinea 3,' The full PRSPwas endorsed by the Boards inJuly 2002. The PRGFarrangementhas beenoff-track sinceDecember2002 Dec-00 Q1 2006 The first annualPRSP progressreportwas submitted in becauseof fiscaland monetaryimbalances.Discussionsare envisage April 2004 andwill bediscussedby the Boards in ona SMP that could start in the lastquarter of2004. Providedatracl August2004. recordis establishedunderthe SMP, anewPRGFcould be inplace by late2005. Guinea-Bissau 31 The preparationof the full PRSP was delayed.As the The PRGFwent offtrack in2001 and macroeconomicperformance Dec-00 Q4 2005 political situationhassubstantiallyimproved, progress has sincebeen poor.InDecember2003 anEmergencyEconomic towardthe full PRSPhasbeenachievedandthe ManagementProgramfor 2004was approved. documentshouldbeready for final discussionand endorsementby end-2004. Hondums 3/ PRSPcompletedinAugust2001. The 1stannual PRGFofftracksinceDecember2001 mainly due to fiscal policy Jul-00 Q1 2005 progressreportwas completedin December2003 and slippages.A newPRGFwas approvedinFebruary2004. endorsedby the Boards inFebruary2004. Madagascar The full PRSPwas presentedto theBoards in The 4th review underthe PRGFwas completedinMarch 2004 and Dec-00 94 2004 November 2003 after asignificant delay causedby the the programwas extendedthroughMarch2005. political crisis in 2002. The 1stannualreview ofthe PRSPwas submittedin July 2004. Malawi A full PRSP was finalized in April 2002 andthe first The 1streview was delayeduntil October 2003 due to policy Dec-00 Q4 2005 annualprogressreport was presentedinOctober2003. slippagesandthe 2002 drought. Completionof the 2ndreviewwas also delayedand the PRGFwas abandonedinMay 2004.The IMis working withthe authoritieson an SMP. Rwanda The full PRSPwas finalized inJune 2002. The 1st The 1streview underthe PRGFarrangementwas completedinJune Dec-00 4 4 2004 annual progressreportwas issuedinJune 2003 and a 2003. The 2ndand3rd reviewwerecompletedinJune2004with JSA was endorsedby the BoardsinJune 2004. waiversfor the nonobservanceofsome quantitativeand structural performancecriteria. Sdo Tom4and Principe 31 A full PRSPwas adoptedby the govemment in The PRGF arrangementwent off track in2001. Performanceundertl Dec-00 Q1 2006 December2003 and is expectedto be submittedto the SMP in2002was satisfactory and continuedinto 2003.Discussions Boards inthe fourth quarter of2004. on a newPRGF are to resumeby September2004. Sierra Leone The full PRSP, expectedby mid 2003, has been A PRGF arrangementwas approvedin September2001.The 4th Feb-02 94 2005 delayed.Significant progresshas beenachievedin early review was successfully completedinFebruary2004. The fifth revie 2004 and the full PRSP is expectedto becompletedby is expectedto be completedin October2004. September2004. Zambia 31 The PRSPwas endorsedby the Boardsin May 2002. The PRGFexpiredinMarch2003 without the conclusionof the last Dec-00 QI 2005 Preparationsare underway for the 1stprogressreport. review.A SMP was adoptedinJuly 2003 and extendedthroughJune 2004. The satisfactoryprogressunderthe SMP ledto the installment ofa newPRGF inJune2004. -30- ANNEX I1 Table 2. HIPCInitiative: Progressin Implementationof Countriesstill to be considered Status as ofJuly 2004 Country Political developments HIPC Status I/ Burundi Recentprogress inthe peaceprocessledto the ParisClub reschedulinggrantedinMarch2004. A full DSA andpreliminary HIPC document to be completec approvalof a PRGFprograminJanuaty2004. at the time ofthe 1st PRGFreview inlate 2004.The PRSP process launchedinJuly 2000. An I-PRSP endorsedbv the BoardsinJanuarv2004. A full PRSP scheduledfor mid-2005. DP could bereachedinmid- 2005. CAR Political situation generally calm since the Sizable stock of arrears.An EPCAprogramapprovedinJuly 2004. An I-PRSPcompleted.The fullPRSPwa installmentof the transitionalgovemment. delayeddueto the political instability andconflict. The preparationhas recentlybeenresumedandthe full IPRSPexpectedby mid-2005. Comoros IFollowingthe signingof an agreementfor joint IA broadrangeof measuresstill needto be takento form the basis for a SMP negotiation.The modalities for govemancebetweenUnionandisland the negotiationof aSMPwere discussedinDecember 2003. An I-PRSP was producedandafter some update governments, the National Assembly was elected the revisedI-PRSPcouldbe presentedto the Boards. inearly2004 andanewgovemment was formed inJuly 2004. Congo, R. of Stablepolitical environment.The countryhas An I-PRSPexpectedto be completedin43 2004. The broadly saiisfactoly implementationof the SMP ledto benefittedfrom anEPCA programin2002. the initiationofnegotiationsonapossible PRGFinMay 2004. Cote dlvoire The security and political situationhas worsened Largeextemalarrears.An I-PRSPwas endorsed inMarch 2002.The interveningconflict delayedthe further since March2004. The agreements completiono fthe full PRSP.No IMF programinplace. reachedat the Accra 111summit inJuly 2004 raisednewhopesfor durable peace. Lao PDR Stablepolitical environment. The full PRSPwas completedandwill bediscussedby the BoardsinAugust2004. The 3rd reviewunderthe PRGFcompletedinSeptember 2003, the 4th couldbe completedinOctober2004. ProvidedLaodecidesto participateinthe HIPC Initiative andstays ontrack with its PRGFprogram, the DP could bereachedquickly Liberia2/ Intermittentwars have underminedthe capacity Nearly all external debt inarrears. Tokenpayments to the IMF resumedinearly 2004. Relationswith the IM1 to deviseandimplementpolicies. The NTGL, will needto be normalizedandpolicies put inplace as a basisfor establishingatrack record.Liberia hasnot which took office inOctober 2003, has shown yet engagedinthe PRSPprocess. commitmentto implementfiscal andgovemance measures. Myanmar21 Politically stable. However, deteriorationinthe No activeengagement with the World Bank andIMF.Little prospect for moving beyondIMF surveillance institutional infrastructureand govemance andWorld Bank's LICUS approach. problemscontinueto erode Myanmar's potential. Somalia2l Domestic conflict continues, no fully functional Substantialextemalarrears,No relationswith the IMF. No PRSP process inplace. nationalauthority. Inearly 2004 anagreement was signedto definethe structure and compositionofthe future government. This representsthe fmal phaseof the peaceprocess launchedinOctober2002. Sudan The agreementreachedinMay 2004 betweenthe External arrears. An I-PRSPis near completion.PerformanceunderSMP so far broadly ontrack. An IMF's governmentandthe Liberation Army, resolved, RightsAccumulationProgrammay be put inplaceby end-2004. Financing assurancesarebeingsoughtfor inpriciple, all outstandingissues.The formal clearing arrears to the IMF. signingofthe comprehensiveagreement expected in late summer of2004. Togo Politically stable. Consultationslaunchedwith No IMF arrangement inplacesince 1998.The I-PRSPwas discussedinthe Council of Ministers inMarch the EU underArticle 96 ofthe Cotonou 2004. I tfirst needsto be adoptedby the govemment andwill be submittedto the World Bank andIMFonce PartnershipAgreementinApril 2004. satisfactolymacroeconomicframework is inplace. Source: IMF Counny Documents I/ReferstotheEnhancedHIPCInitiative 2/ Countries innon-accmalstatus with World Bank disbursementssuspended. - 3 1 - ANNEX I1 Table 3. Change in Debt Ratios from Completion Point Reference Year to end-2003: Decomposition of Contributing Factors (Percentage Points) Contributing Factors Reference Anticipated Unanticipated Current Year NPV Export/Fiscal New New Discount Exchange Estimate Country Ratio Revenues 11 Borrowing 21 Borrowing31 Rates41 Rates 51 NPV Ratio Export Cases Benin 155 -19 21 1 20 18 196 Bolivia 117 -19 34 11 26 8 176 Burkina Faso 150 -45 59 -11 23 23 199 Mozambique 113 -35 20 0 23 9 130 Mali 134 -48 18 -3 13 20 134 Nicaragua 138 -3 13 2 10 4 164 Niger 150 -35 22 0 25 19 182 Tanzania 105 -24 19 -3 23 20 140 Uganda 171 -16 42 8 30 24 258 Fiscal Cases Guyana 206 -2 9 4 13 13 243 Mauritania 201 -28 22 1 24 36 256 Senegal 156 -25 7 -1 8 10 154 Source: CompletionPoint documents; andWorld Bank andFundstaffestimates. 1/ This column reflectsthe contributionofthe change inexportdrevenuesfrom completionpoint to end-2003. 2/ Anticipatedchanges refer to changes innew borrowingthat were projectedat completionpoint.New borrowingshownis gross new borrowingnet ofamortizations. 3/ This column reflects only the contributionofnewborrowingbetweencompletionpoint andend-2003 that was unanticipatedat the completionpoint. 4/ This column reflectsthe change inNPV ofdebt due to discount rate(the average 6-monthCIRR) changesbetweenthe completionpoint andend-2003. 5/ This columnreflectsthe change inNPV of debt due to changes inthe US dollar exchange rateandother major currencies betweenthe completionpoint andend-2003. - 32 - ANNEX I11 Annex I11EnhancedHIPC Initiative:CountryImplementationStatusNotes A. ImplementationStatus of HIPCsinthe InterimPeriod (As of end-June2004) Cameroon PRSPStatus:The fullPRSPwas discussedbythe World Bankandthe IMFBoards at the endofJuly 2003. The document, builtona large consultative andparticipatory process, provides an adequateframework for guiding the implementation o f a credible poverty- reduction strategy. The Government has set the institutional framework for the monitoring and evaluation o fthe implementation of the PRSP. The committees incharge, namely the Inter-MinisterialCommittee under the leadershipofthe primeminister andthe Technical Committee under the leadership ofthe minister of economy, have producedtwo quarterly reports in2003 andthe first annual PRSPprogressreport, which was submittedto the World Bankandthe IMFinJuly 2004. PolicyPerformance:Cameroon's macroeconomic environment is characterizedby average real GDP growth of 4.5 percent per annumover the last five years, low inflation (under 1percentin2003), andatotal overall fiscal surplus (on a commitment basis, including grants) of 1.9 percent of GDP. The fourth reviewunderthe PRGF arrangement was completed inDecember 2003, after a long delay due to difficulties inreconciling fiscal data. The program was extendedfor ayear through December20,2004. Completion ofthe fifth reviewhas beendelayedbecauselower-than-programmed non-oilrevenue and lower domestic public debt repaymentsresultedinsignificant deviations from fiscal program targets at end-December 2003 and end-March 2004. Also, the financial situation of some key public enterprises, inparticular the public airline CAMAIR andthe postal entity CAMPOST, deterioratedsharply. The Government is currently reviewingthe options for liquidationof CAMAIR andrecapitalization o f CAMPOST. Social and StructuralCompletionPointTriggers: At this stage, Cameroon has met most social and structural triggers. Important achievements include: (i)the satisfactory conclusion of SAC I11at end-March 2004, covering reforms inforestry, transport, the financial sector andprivatization; (ii) measuresto improve governance: the creation of the audit chamber and the constitutional council, ongoing budget tracking surveys, completion of an audit of the judiciary system as well as o f an action planto improve it, and implementation o fthe procurement reform; and (iii) satisfactory implementation ofthe triggers inthe education and health sector. Cameroon's policy inthe anti-retroviral (ARV) treatment of patients i s now quotedas good practice by UNAIDS. The mainsocial and structural measuresthat remain are the completion ofthe audit ofHIPC expenditures and the adoption ofthe procurement code. The authorities expect these measuresto be inplace by August 2004. - 33 - ANNEX I11 Decisionand CompletionPoints:The decisionpoint was reachedinOctober 2000. Camerooncouldreach the completion point by end-2004 or early 2005 provided itmeets all ofthe remaining completion point triggers and satisfactorily implements the PRGF-supported program. Creditor Participation:Cameroonhas receivedfinancing assurances oftotal HIPC debt relief from official creditors holdingmore than 98 percent of its debt. About 79 percent of eligible commercial debt was retiredby August 2003 under the DebtReductionFacility for IDA-only countries administered by the World Bank.Paris Club creditors, the World Bank, the IMF, the AfDB, the EuropeanCommission, andthe Islamic Development Bankhave provided HIPC interimassistance. A proposal for the provisiono f interimassistanceby the OPEC Fundwas sent to the authorities andanagreement is expectedto be reachedsoon. IDA and AfDB interimrelief endedinMarch2003 andOctober 2003, respectively, as Cameroonreachedits interimrelief cumulative limit. So far, only Saudi Arabia has not yet committed to provide full HIPC debt relief. Bilateral agreements have been signedwith Kuwait and China. Chad PRSPStatus:The PRSPwas transmittedto the IMFandthe World Bank inJune 2003 and discussed by the Boards o fthe two institutions inNovember 2003. A donor roundtable is expectedto take place inGenevainlate 2004. The authorities have launched the review of the PRSP implementation, andare expectedto completethe first annual PRSPprogress report by November 2004. PolicyPerformance:A PRGF arrangementwas approvedinJanuary2000 andextendedto January 2004 following the completion o fthe fifth review inJuly 2003. The last review was not completed because macroeconomic performance was weak in2003,andthe authorities didnot have enoughtime to take corrective measures before the PRGF arrangement expired. Real GDP growth was about 10percent in2003 and is projected to reach about 40 percent in 2004, due to expectedhigher oil revenues.The appreciation o fthe CFA franc (pegged to the Euro) against the U S dollar contributed to a faster-than-projected decline o f the inflationrate, which decreased from 12.4 percent in2001 to 1.8 percent in2003. At end-June 2004, weak revenueperformance and shortfalls inexternal budgetary support ledto the accumulation of external arrearsto multilateralandbilateral creditors. Negotiations on a successorPRGF arrangement are expected to start inAugust 2004. Social andStructuralCompletionPointTriggers: Progress on meeting conditions inthe areas of governance, health(including HIV/AIDS), education, andrural infiastructure has beenuneven, butprogresshas beenobservedinseveral sectors inlate 2003 andearly 2004. A numberof triggers have already beenreachedinthe governance, health, education, infrastructure and water sectors. However, some indicators inthe social sectors andinrural development remain far from target. - 34 - ANNEX I11 DecisionandCompletionPoints:Chadreachedthe decisionpoint inMay 2001andis expectedto reachthe completion point inthe third quarter of 2005. Creditor Participation:Chadhas receivedassurances ofHIPC debt relief from creditors holding 93 percent of its debt at the decision point. Most non-Paris Club bilateral creditors, excluding Kuwait, have not yet indicated they will provide HIPC reliefbut may do so after Chadreaches the completion point. Chadhas been receiving HIPC interimassistance from the WorldBank,the IMF,the AfDB, the EuropeanCommission, the OPEC Fund, andParis Club creditors in2003. Paris Club interimassistance expired inDecember 2003 following the expiration ofthe PRGF arrangement. The IsDBcommittedto deliver HIPC assistance, buthas not yet startedto provide it.TheArab Bank for Economic Development inAfrica (BADEA) grantedinterimassistance inthe form ofconcessionalrescheduling ofarrearsafter the decision point. DemocraticRepublicofCongo PRSPStatus:The I-PRSP was presentedto the Boards inJune 2002, andcompletion of a fullPRSPis expectedinthe thirdquarterof2005. A first Joint StaffAssessment (JSA) on progressmade inthe preparation of the full PRSPwas approved by the Boards ofthe IMF andthe World Bank inJune 2003. An annualupdate ofthe PRSPpreparation status report andthe JSA, covering the period June 2003 to May 2004, was discussedby the Boards in July 2004. The authorities have createda framework for channeling andtracking poverty- reducing expenditures (including infrastructure), which in2003 amountedto 1.5 percent o f GDP, up from 0.3 percent the year before. PolicyPerformance:A PRGF arrangementwas approved inJuly 2002. Performanceunder the program has beenbroadly satisfactory, with good progresson the structural side. After 13 years o f decline, real GDP growth becamepositive in2002 (3.5 percent), acceleratedto 5.6 percent in2003, and i s expectedto be 6.3 percent in2004. Inflationhas continued to decrease sharply from 511percent at end-2000to 16percent at end-2002, and is expectedto reach4.4 percent in2003, andthe cumulative rate at end-June 2004,2.7 percent, was inline with the program. The exchange rate of the Congo franc against the U.S. dollar has continued to be stable. The returnto a normal budgetary processhas ledto a continued strengtheningo f public finances. The business climate has improved, owing to far-reaching structural reforms that will be implementedacross the entire nation, now that the country i s reunified.A new Transitional Support Strategy (TSS) was discussedand apost-reunification economic recovery credit was approved by the World Bank BoardinFebruary 2004. To helpachieve effective reunification, the World Bank Boardapproved inMay 2004 a US$lOO million grant to supportthe government's efforts to demobilize andreintegrate ex-combatants. The IMF Board completed the fourth review under the PRGF arrangement inJuly 2004. The fifth review is expectedto be completed inJanuary 2005. Social andStructuralCompletionPointTriggers: Measuresto meet completion point triggers have beentaken, with good progress inthe areas o f public expenditure anddebt management. While there have beendelays inlaunching the participatory surveys, the - 35 - ANNEX I11 government is on track for completing a full PRSP inAugust 2005 andachieving a full year of implementation by the third quarter of 2006. The PRGF-supportedprogram is ontrack. An independentPro-Poor SpendingMonitoringCommittee hasbeencreated, and will track all pro-poor spending for 2004, includingabout US$107millionto be spent from HIPC savings. Thetriggers onpublic expendituremanagementare beingmetandthe reforms implemented, andit is expectedthat the governanceand service delivery triggers will similarly bemet. Work on sectoral strategiesis progressing satisfactorily. The software to monitor debt has been identifiedand funding for its purchaseand associatedtraining i s being sought. Unless there are further delays inthe execution of the participatory consultations, the completion point triggers are expectedto be met on schedule. Decisionand CompletionPoints:The Democratic Republic of Congo reachedthe decision point inJuly 2003 and is expectedto reachthe completion point inthe thirdquarter of 2006. Creditor Participation:The Democratic Republic of Congo receivedassurances ofHIPC debt relieffrom creditors holding93 percent ofits debt at the decisionpoint in2003. The Gambia PRSPStatus:A full PRSPwas completed inApril 2002 andpresentedto the World Bank and IMF Boards inJuly 2002. The PRSP focuses on promotionof growth andemployment; improved delivery of social services, stronger gender, HIV/AIDS,andenvironmental policies. Budgetedpoverty-reducing spendinghas beenat or above 5 percent o f GDP since 2000, and is expectedto remain at that level for the next few years. The first annual PRSP implementation report i s expectedinthe third quarter of 2004. PolicyPerformance:The PRGF arrangement, approved inJuly 2002, is offtrack dueto fiscal andmonetary policy slippages, misreporting and governance issues. InMarch2004, the IMFBoard concluded the 2003 Article IV consultations anddecidedthat The Gambia should repay two non-complying disbursementstotaling SDR 6.87 millionthat were made in 2001 under the previous PRGF arrangement. A financial safeguards assessment mission in November 2003 concluded that there were highrisks to IMFresourcesandrecommended, among other things, a special audit o f foreign exchangetransactions at the central bank, a change inthe external auditor, anda re-audit ofthe 2001/02 financial statements. The authorities have agreedto these measures andthe final audit reports are expectedto be submittedto the IMF at end-August 2004. Receipt ofthe reports should also allow the finalization of a Staff-Monitored Program (SMP) that was negotiated during a staffmission inJune/July 2004. The SMP covers the secondhalfof2004 andcouldleadto aresumptionof PRGF support inearly 2005. With continued tight monetary policy and additional revenue measures taken inMay 2004, the monetary and fiscal outlook for 2004 has significantly improved. The recovery from the crop failure in2002 i s expectedto continue, with real GDP growth of about 7 percent in2003 and 2004. Two o fthe World Bank's six active projects (Education and Capacity Building for Economic Management) are currently rated as unsatisfactory because of poor execution arrangements. - 36- ANNEX I11 Social and Structural Completion Point Triggers: Satisfactory progresshas been made in implementing measuresinhealthandeducation, but delays have beenexperiencedin tracking the use of HIPC relief and promotingprivate sector development. A multi-sector regulatory agency (Public Utilities Regulatory Agency) has beenestablishedbut still needs to bemadefunctional, while efforts to privatize the assets ofthe Gambia Groundnut Corporation (GGC) continue to lag. Donors, including the World Bank, have indicated that continued efforts on structural measures are needed. The fulfillment o ftriggers related to PRSP implementation, the restructuring of the Central Statistics Department, andthe allocation o f recurrent budget for primaryand secondary health care are still pending. Decision and Completion Points: The Gambiareachedthe decision point inDecember 2000 and could reachthe enhancedHIPC completion point by early-2006, provided a PRGF- supportedprogram i s inplace andhas beensatisfactorily implemented. Creditor Participation: Creditors holdingabout 81percent o f The Gambia's debt have agreedto provide HIPC debt relief. China, Kuwait, Libya, and Taiwan Province of China, accounting for about 19percent of HIPC relief, have not yet signed agreementsto provide reliefbut could do so after the completion point. Paris Club creditors agreed inJanuary 2003 to provide interimreliefon Cologne terms; however, the secondannual tranche ofthe rescheduling (July 2003 -July 2004) was not implementeddue to the failure to completethe first PRGF review. The World Bank, the IMF, the AfDB, the EuropeanCommission, the IsDB, andthe OPEC Fundhaveprovided interimHIPC assistance.The provisionofIMF interimassistance lapsedas ofend-2003. Interimassistancefrom the AfDB endedinOctober 2003 as the cumulative limit was reached, andIDA interimrelief will end inDecember 2004 for the same reason. Among multilateral creditors, only the Economic Community of West AfricanStates (ECOWAS) has not yet committed to participate inthe enhancedHIPC Initiative. Guinea PRSP Status: A full PRSP was completed inJanuary 2002 and endorsedby the IMF andthe World Bank Boards inJuly 2002. Poverty-reducing spending increased in2002 with the use of interimassistance but slowed down in2003 as aresult o frevenue shortfalls and the suspensionof interimassistanceby some creditors after the 2001-04 PRGF program went offtrack. The authorities organized regional consultations to update the full PRSP. Those consultationsrevealedthat, while the strategy as laid out inthe PRSP was appropriate, some regions faced uniquepoverty-related problems stemming from locationandresource endowments. The regional poverty reduction strategies, conceived as subsets of Guinea's PRSP, were finalized inDecember 2003. The authorities transmitted to the Fundandthe Bank their first PRSPprogressreport inApril 2004, incorporating some feedback provided by Fundand Bank staffs on a draft submittedinJanuary. The report underscoredthe constraints that the authorities faced duringthe first two years o f the implementation ofthe PRSP. These include institutionalweaknesses, notably at the local level, weak government revenues, higher spending due to regional security conditions, andweak domestic investment.The progressreport is expectedto be discussedbythe Boards inAugust 2004. - 3 7 - ANNEX I11 PolicyPerformance:A PRGF arrangementwas approvedinMay 2001. A first review ofthe PRGF-supported program was concludedinJuly 2002 after the authorities took measures in the first quarter of 2002 to correct weaknesses inrevenue mobilization andto improve budgetary management. The PRGF-supportedprogram went offtrack inDecember2002, largely due to budgetary overruns innon-priority sectors and excessive bank financing. Negotiations on a SMP beganinJanuary 2003 but couldnot be finalizedbecause expansionary fiscal and monetary policies continued throughout the year and inthe first quarter of 2004. InApril 2004, the government started implementing an emergency recovery program to stabilize the economy. The PRGF arrangement expiredinMay 2004. The government's emergency program was discussedwith IMF staff duringthe 2004 Article IV consultation conductedinMay 2004. Good implementation ofthis program andprogressin specific structural areas could form the basis for Staff-Monitored Program (SMP) that could start inthe last quarter o f 2004. Provided atrack record of policy performance i s established underthe SMP, anew PRGF arrangementcould beput inplaceby late 2005. Social andStructuralCompletionPointTriggers: Despite some delays, good progresshas been made toward achieving the completion point triggers inthe areas of governance, the regulatory framework for microfinance institutions, health, and education. While an autonomous Anti-Corruption Committee was established, itrecently became an agency supervised by the Ministryo f Economic andFinancial Inspection, which could undermine the achievements inthe governanceand corruption area. Decisionand CompletionPoints: Guineareachedthe decisionpoint inDecember2000 and could reachthe completion point inthe first quarter o f 2006 at the earliest. The completion point would dependon the timing ofthe SMP andthe ensuing PRGF arrangement and Guinea's performance thereunder. Creditor Participation:Guinea hasreceivedsatisfactory assurances ofdebtrelieffrom creditors holding 85 percent of its debt at the decision point. The World Bank, the IMF, the AfDB, the EuropeanCommission, andParis Club creditors hadbeenprovidinginterim assistance since 2001. However, owing to poor performance under the PRGF-supported program, Guinea's eligibility for interimHIPC assistancefrom Paris Club members,the IMF, and the AfDB was suspendedat end-April, end-June, andend-December 2003 respectively. Among non-Paris Club creditors, Egypt, Kuwait, andMorocco have indicated willingness to provide HIPC relief. The others-Bulgaria, China, Iraq, Romania, SaudiArabia, Libya, North Korea, and Thailand-have not indicated willingness to provide HIPC reliefbut could do so after the completion point. - 38 - ANNEX I11 Guinea-Bissau PRSP Status: The political situation has improvedsubstantially. On September 14,2003, PresidentKumba Yala was deposedina bloodless coup d'dtat. The military quickly restored power to civiliancontrol. New legislative elections were heldon March 28, 2004; presidential elections will be heldno more than 12 months later. A new cabinet was appointed andtook office inMay. The preparation o fthe full PRSP was delayed as aresult of the politicalinstability, administrative difficulties, andlack oftechnical expertise. Withthe helpofthe donor community, however, the government has madeprogress inthe preparation of the document. Currently, the full PRSP i s nearly complete. InJune 2004 a draft PRSP was discussed, on an informalbasis, with World Bank and IMFstaff andrepresentativesofthe donor community. A revised draft PRSP i s expectedto be submittedfor a broad-based participatory discussion inthe third quarter of 2004. A final draft document reflectinga national consensusshould be ready by end-2004. Policy Performance: The PRGF-supported program went offtrack immediately after its inception at the end of 2000, reflectingfiscal policy slippages associatedwith heavy defense spending, increasesinthe wage bill, andpolitical interference inpublic financial management. A lack o fcommitment to reformandadjustment policies under the post- conflict strategy resulted indeclining economic activity andmounting fiscal deficits. The transition government adopted an emergency economic managementplanfor 2004 at end-December2003. The planincludes a budget for 2004 basedon realistic revenue projections, minimumexpenditureneeds, andpriority for the social sectors. Despite , considerable external financial assistance, the authorities have been unable to fully execute the emergencybudget, dueto lower-than-projected tax revenue inthe first halfof2004. All IDA-financed projects are currently ratedsatisfactory. Encouraging, albeit slow, developments have occurred inaddressingstructural and social issues, including demobilization, public procurement reform, privatization, private sector development, and HIV/AIDS. Inorder to keep its reform agenda on track, the Government requesteda restructuring ofthe IDA portfolio in2003, with amendments to Development Credit Agreements o fthe Basic Education and Private Sector Rehabilitation Projects. The World Bankapproved the restructuringpackagein2003 anddisbursedthe two floating tranches underthe Economic RehabilitationandRecovery Credit inMarch2004, one with conditionality related to the government's demobilization program andthe other with conditionality related to the government's domestic arrears settlement program. Social and Structural Completion Point Triggers. Progress inmeeting completionpoint triggers ineducation and governancehas beenslow; some progresshasbeennoted inhealth. Public expenditure managementremains a central focus of concern. The transition Government took a number of measuresto reinstate fiscal control, concerning tax liabilities andtax exemptions, andthe nominationofa Treasury Committee to ensurethat expenditures are limitedto available resources. The demobilization program has made significant progress and is expectedto be successfully completed in2005. -39- ANNEX I11 Decisionand CompletionPoints:Guinea-Bissaureachedits decision point inDecember 2000. Completing the PRSP andbuilding atrack recordtoward reaching the completion point remains a challenge. Consequently, the earliestpossible date for reaching the completion point is estimated inthe fourth quarter of 2005. Creditor Participation:Creditors holdingmorethan81percentof Guinea-Bissau's debt at the decision point have agreedto provide HIPC relief. The World Bank, the IMF, the EuropeanCommission, the AfDB, the InternationalFundfor Agricultural Development (IFAD), andParis Club creditors agreedto provide interimassistance. China andCubahave written off their claims. Agreements to reschedulearrears have been concluded with a number ofmultilateral creditors, butbecauseofthe continuing political andeconomic problems, they have not been implementedfor the most part. Inview o fnonperformance underthe PRGF-supported program, IMFinterimassistancestoppedafter one year at end-2001,and inJanuary 2003 the Paris Club creditors declaredthe rescheduling agreements of 2002 and 2003 inoperative. Currently, the World Bank andthe AfDB are the only creditors providing interimreliefto Guinea-Bissau. Kuwait has agreedto provide debt relief butthe other bilateral creditors, Angola, Algeria, Pakistan, Libya, UnitedArab Emirates, SaudiArabia, andTaiwan Province of China have not yet agreedto do so. The newly elected government has indicatedthat it will shortly be contacting its creditors to regularize relations. Honduras PRSPStatus:A PRSP was completed inAugust 2001 andendorsedby World Bankand IMFBoards inOctober 2001. The first annualprogressreport was endorsedby the Boardsin February2004. Civil society was consulted onthe draft progressreport inApril and May 2003, Poverty-reducing expenditureshave beenbelow PRSP targets: actual PRSP spendingreached3.2 percent of GDP in2001 and 2.5 percent in2002, versus spending targets of 5.4 and 5.9 percent inthose two years. This shortfall is largely explained by the temporary derailment o f the economic program during 2001-03 andthe consequentdecline in aid flows targetedfor poverty-reducing activities. Poverty-reducing spending has been redefinedinthe annualprogressreport, andis programmed to increaseby 0.6 percentof GDP per year in2004-06. PolicyPerformance:The PRGF-supported program initiatedinMarch 1999went offtrack at the end of 2001, due mainly to fiscal policy slippages associatedwitha continued increase inthe governmentwage bill, weak tax collections andweak progressonkey structural reforms. The program expired at the endo f 2002. Subsequently, the fiscal situation further deterioratedand the pace o freforms remained slow. A new PRGF arrangementwas approved by the IMF Board inFebruary 2004. Key elements ofthe program are fiscal adjustment supportedby anew salary law and additional revenuemeasures, recovery o fpublic investment and PRSP-spending, and ambitious financial sector reforms. All 12 World Bank- fundedprojects are currently ratedas satisfactory. Social andStructuralCompletionPointTriggers:The authorities have beenmaking good progress inimplementing reforms and inmeeting completion point triggers. Inthe area of - 40 - ANNEX I11 governance, an anti-corruption strategy was preparedandpublishedinconsultation with the civil anddonor community. Schoolswith community participation have beencreated, andthe rate of student enrollment i s on target. The deliveryof apackage o fhealthserviceshas been delayed, but anaction planto meet the target has beenagreedupon. The envisioned reforms ofthe social security systemare well advanced, as is the program to increasethe efficiency andtargeting ofsafety netsthrough participatory planningmethodologies. Additional efforts are needed, however, to strengthenthe financial system for compliance with the Base1Core Principles. Decision and CompletionPoints: Hondurasreachedthe decision point inJuly 2000 and could reach the completion point by early 2005. Creditor Participation:Creditors holding93 percent of Honduras' debthave indicatedtheir intentionto deliver debt relief. The Paris Club andmajor multilateralcreditors delivered interimrelief in2000 and2001. However, interimrelieffrom the WorldBank andIDB endedinJuly 2002, becausebothinstitutions reachedtheir cumulative NPV ceilings for interimrelief. Interimrelief from the IMFexpired inOctober 2002, whenthe first tranche of assistance was fully exhaustedbut was subsequentlyresumedin2004 inconnection with the newPRGF arrangement. Theprevious agreementwith Paris Club creditors expired inApril. InApril 2004, following approval ofthe newPRGF arrangement,the ParisClubrescheduled accumulated arrears and debt service falling due in2004 andthe first half of 2005. Costa Rica, Mexico, andVenezuela have not yet agreedto provide HIPC reliefto Honduras but could do so after the completion point. Madagascar PRSPStatus:The hllPRSPwas completed inJuly 2003 andpresentedto the World Bank and IMF Boards inNovember 2003. The preparationo fthe full PRSP took significantly longer thanhadbeenexpecteddue to the 2002 political crisis inthe country. The final PRSP i s markedlydifferent from the pre-crisis PRSP, partlydue to the social impact o f the crisis necessitatingemergency social policy actions. Budgetary allocations to the health and education sectors have increasedinrecent years, due inpart to HIPC assistance. Inthe first half of 2004, the Government producedreports on the use o f resourcesmade available from interimdebt relief in2002 and2003, which were discussedwithdonors. Inmid-January 2004, the Government organized a workshop to conduct a mid-year review o fthe implementation o fthe PRSP andproduced a first draft ofthe annual PRSPprogressreport. Subsequently,a series ofregional workshops were heldinthe periodMarch-May 2004. The final progressreport for the first year o f implementation of the PRSP was submittedto the World Bank and the IMF inJuly 2004. Policy Performance:A PRGF arrangement was approved inMarch2001. The political crisis of the first half o f 2002 severely affected economic activity and real GDP in2002 droppedby 12.7 percent. The economy rebounded in2003, withreal GDP growth of 9.8 percent and inflation o f -0.8 percent (on a year-on-year basis). Fiscal performance, however, was weaker than envisagedunder the program, as slippages (lower tax revenues -41 - ANNEX I11 and extra budgetaryexpenditures) occurred during the secondhalfo f 2003. InMarch2004, the IMFBoardcompletedthe fourthreviewofthe PRGF-supportedprogram andapproved the extension of the arrangementuntilMarch 1,2005. However, preliminary estimatesofthe macroeconomic performance ofthe first half2004 indicate that the risks to macroeconomic stability have increasedmarkedly. The exchangerate has depreciated sharply inthe recent months leading to a rising inflationand a weakeningbalanceo fpayments position, with low foreign exchange reserves.The World Bank endorsedthe first Poverty Reduction Support Credit for MadagascarinJuly 2004. Social and StructuralCompletionPointTriggers:Currently all the conditions pertaining to the completion point are broadly met, despitethe delay causedby the 2002 crisis. Financial monitoring and control have been improved as follows: (i) monitoringsystems for the budgetary cycle insix ministries are establishedandthe government is inthe process of furtherconsolidating the monitoringsystems; (ii) government hasproducedbiannual the reports on education andhealth sector activities at central and decentralized levels, including budgetary allocations, expenditureexecution, andphysical achievements; (iii) all the laws pertaining to the strengthening andmodernization ofproceduresand internalcontrol systems havebeenpassedby the parliamentandthe Senate; (iv) the treasury accounting systemwas strengthened; (v) despite a significant delay, atransparentpublic informationsystemon grantingoflicensesinthe mining, forestry, andfishing sectorshasbeenimplemented. Substantialprogresshas been madeby the government inimproving service delivery inthe health and education sectors. Decisionand CompletionPoints:Madagascarreachedthe decision point inDecember 2000 andcouldreachthe completion point inthe fourth quarter of2004. CreditorParticipation:At decision point, Madagascarreceived satisfactory assurancesof relief from creditors holding 91 percent its total debt. It continues to receive interim HIPC assistancefiom the World Bank, the IMF, the AfDB, the EuropeanCommission, the OPEC Fund, andParis Club creditors. Withthe exception ofChina andKuwait, none of Madagascar's non-Paris Club bilateral creditors has agreedto provide HIPC relief, but could do so after the completion point is reached. Malawi PRSPStatus:The PRSPwas finalized inApril 2002 andpresentedto the World Bankand IMFBoards inAugust 2002. The Boards approved the first annual PRSPprogressreport in October 2003. The resources made available fiom interim debt relief have beenusedto fund anexpansion inpro-poor spendingprograms, includinghealth andeducation expenditures identifiedinthe PRSP as primarilybenefitingthe poor. Government poverty-reducing expenditureshave increased and reached 11.2 percent of GDP in2003. PolicyPerformance:A PRGF arrangementwas approved inDecember 2000. Dueto policy slippages and the 2002 drought, the conclusion ofthe first reviewwas delayed until October 2003. Completion o f the secondreviewwas also delayed andthe PRGF-supported - 42 - ANNEX I11 program was abandonedinMay 2004. The IMFis working with the authorities on a Staff MonitoredProgram. Discussions on a newPRGF arrangement could start inearly 2005, at the earliest, depending on a satisfactory performanceunder the SMP. Economic performance during 2003/04 has beenmixed.Economic growth is projectedto slow down from 4.5 percent in2003 to about 4 percentin2004, andinflationis expectedto increasefrom 10percent at end-2003 to 18-20percent by end-2004. The Central Bankhas reducedinterest rates from 45 percent inSeptember 2003 to 25 percent inJune 2004. Implementation of structural reforms has improved considerably. The Government has implementeddifficult structural reforms inpreparation for the World Bank SAC (FIMAG), notably intobacco marketing, landfees, parastatalreforms, andthe fight against HIV/AIDS.The authorities have also repealedthe ADMARC Act and incorporated it as a limited liability company. Moreover, the Corrupt PracticesAct has beenapproved, measuresthat underpincivil service wage reformhave been adopted, and progresshas been made inthe audit of domestic arrears. Social and StructuralCompletionPointTriggers:Goodprogresshas beenmadetoward meeting the completion point triggers ingovernance, public expenditure management, education, andhealth. More progress is neededinthe landandcredit reform, andthe development of social safety nets. Decisionand CompletionPoints:Malawireachedthe decisionpoint inDecember2000. The completion point couldbereachedinlate 2005 if(i) macroeconomic performance i s satisfactory; (ii) second year of PRSP implementation is satisfactory (a progressreport on the implementation duringFY2003/04 i s expectedinthe fall); and (iii) progress is made in meetingthe few outstanding completion point triggers. CreditorParticipation:Malawihas beenreceiving interimreliefunderthe enhancedHIPC Initiativefrom the World Bank, the IMF,the AfDB, andthe EuropeanCommission. Interim relief from the IMF, extendedafter the conclusion of the first PRGF review, will be exhaustedby September 2004 andwill beresumed only after the IMF Boardapproves anew PRGF arrangement. Interimrelief by the AfDB was exhausted at end-2003. Other multilateral creditors will start providing reliefat the completion point. Bilateralagreements covering the initial interimperiodwere signed with all Paris Club creditors, except for France. The second and third phases o f the Paris Club agreement signed inJanuary 2001 entered into force inNovember 2003. With respectto non-Paris Club creditors, SouthAfrica has written off its debt; no agreementhas yet beensignedwithTaiwan Province of China. The authorities will contact their creditors to identify their willingness to extent the provision of interimrelief duringthe SMP period. Rwanda PRSPStatus:A PRSPwas completed inJune 2002 anddiscussedbythe Boards ofthe IMF andthe World Bank inJuly andAugust 2002, respectively. Performance inthe social sectors continuesto be strong. Poverty-reducing spendinghas been steadily increasing, andthis trend i s projectedto continue. Such spending stood at 3.9 percent o f GDP in 1999 and roseto 6.1 percent in2002, Itreached6.3 percent of GDP in2003 and is projectedto rise to - 43 - ANNEX I11 7.4 percent in2004 and2005. The first annualprogressreport was issued inJune 2003. A Joint StaffAssessment was completed and endorsedby the Boards of the World Bank and the IMFinJune2004. Policy Performance: A PRGF arrangementwas approved inJuly 2002 andthe first review under the arrangementwas completed inJune 2003. As ofend-June2003 macroeconomic performance hadbeensatisfactory. Duringthe June 2003 review o fthe PRGF arrangement, six quantitative performance criteria and all structural criteria were met. Three quantitative measureswere narrowly misseddue to weakened policy performance as of August 2003, brought on by exogenous shocks. Real GDP growth in2003 slowed to one percent, owing to poor rains andweak prices for the major export crop. The increaseininflation, which reached7 percent in2003, was mainly drivenby sharp food and fuel price increases. Unforeseenexpendituresfor the national elections andone-off expenditures to the health sector ledto an increaseinthe fiscal deficit. The situation was exacerbatedwhen programmed external grant financing did not materialize. To correct for the above slippages, the 2004 PRGF-supported program includes a substantial reduction innet credit to the government from the banking system, slower reserve money growth, and a fiscal program that incorporates contingent cuts to assure the domestic fiscal balance remains consistent withmacroeconomic objectives. InJune 2004, the IMFBoardcompleted the secondand thirdreviewsofthe PRGF-supported program andapproved the disbursementofcontinued interimassistanceunderthe HIPC Initiative.To addressconcernsabout external debt sustainability andto achieve targetedimprovements inagricultural productivity, the Government is currently engagedindiscussionswith the World Bank and other development partnersto outline a clear strategy for export promotionandthe related generation offoreign exchange and employment. Social and Structural Completion Point Triggers: Progress inmeetingthe triggers inthe areas o ftracking HIPC expenditures, privatization, education, health, and gender has been satisfactory. All triggers relatedto HIPC expenditures, education, and gender have beenmet, andadvances onthe outstandingtriggerscontinue to besatisfactory. Decision and Completion Points: Rwanda reachedthe decision point inDecember 2000 and subject to continued satisfactory performance under the PRGF-supportedprogram it could reachits completion point by the endo f 2004. Creditor Participation: Rwandahasreceived financing assurancesof HIPC assistancefrom creditors holding 95 percent of its debt at the decision point. Interimassistancehas been provided by the ADB, the World Bank, the IMF, the EuropeanCommission, and the Paris Club. BADEA and IFADhave agreedto provide HIPC relief at the completion point. The OPEC Fundhas already disbursedits share o f debt relief. Among the non-Paris Club creditors, the KuwaitiFundand Saudi Arabia signed a rescheduling agreement. The other creditors (China, Libya, andthe Abu Dhabi Fund) have not yet signedagreementsto provide HIPC debt relief, but could do so after the completionpoint is reached. An agreementwith the AbuDhabiFundis expectedto beconcluded inthe near future. - 44 - ANNEX I11 Siio Tom6 andPrincipe PRSPStatus:A full PRSPwas adoptedbythe government inDecember 2002 andcouldbe submittedto the World BankandIMFBoardsinthe fourthquarter of2004. The first annual progressreport would thenbe expectedto be producedby the end o f 2005. Fivepillars have been identifiedfor the PRSP: (i) reforming public institutions, building capacity, and promoting good governance; (ii) fostering growth; (iii) opportunities to increaseand creating diversify income for the poor; (iv) developing humanresource and access to basic social services; and (v) adopting mechanisms to monitor, assess, andupdatethe strategy. Poverty- reducing expendituresare expectedto increaseto around 23 percent o f GDP in2004 and 2005, from some 20 percent in2002 and2003. PolicyPerformance:The PRGF arrangement, approvedinApril 2000, went offtrack in 2001due to fiscal and structural reform slippages, compoundedby oil sector governance concerns. Structural reforms and macroeconomic policy implementation were broadly satisfactory during 2002 under a StaffMonitoredProgram, andthis track record was broadly maintained in2003. A newPRGF arrangement was discussedinearly July 2003, but political instability (a short-lived coup d'6tat followed by efforts to form a new democratic government) placed program discussionson hold, Discussions on the PRGF arrangement resumedinNovember 2003 at the time ofanArticle IV consultation missionbutthe authorities explained that they couldnot yet commit to medium-termfinancial policies citing the tense sociopolitical environment andtheneedto buildconsensus.Discussions onthe PRGF arrangement are to resume by September 2004. Macroeconomic performance in2003 was broadly satisfactory, and real GDP i s estimatedat 5 percent with inflationnear 10percent. Social and StructuralCompletionPointTriggers: Significant progresshas beenmade toward meeting the completion point triggers inthe areas of education andhealth. Progress has beenmade on triggers on governance, excepting the tribunal o f arbitration inbusiness and contract matters, which is not yet operational. Decisionand CompletionPoints:Silo Tom6 andPrincipe reachedthe decisionpoint in December 2000. The completion point, originally expectedfor late 2003, couldbe reachedin the first quarter o f 2006, provided a PRGF-supported program is inplace andhas been satisfactorily implementedinaddition to ayear's satisfactory implementation o fthe PRSP. Creditor Participation:At the decision point, Silo Tom6 andPrincipe received financing assurances of HIPC relief from creditors holding about 85 percent o f its debt. Interim assistance i s beingprovidedbythe World Bank, the AfDB, andthe EuropeanUnion. The IMF is not providingassistancebecauseithadno claims at the decision point. The OPEC Funddelivered its full share of debt relief inMarch2003, Paris Club creditors have provided interimassistance, butdue to the PRGF program going offtrack, only the first phaseofthe May 2000 agreementwas implemented. Non-Paris Club bilateral creditors (Algeria, Angola, Former SFR Yugoslavia, and China) have not signed agreementsto provideHIPC reliefbut could do so after the completion point. - 45 - ANNEX 111 Sierra Leone PRSPStatus:An I-PRSP was completed inSeptember2001. Accordingto the schedulein the I-PRSP, the final PRSPwas originally expectedbyDecember 2002. Itwas delayed pending the full disarmament anddemobilization of Revolutionary UnitedFront rebels; the resettlement andreintegration of internally displacedpersons, refugees, and ex-combatants; andthe holding ofpresidential andparliamentary elections in2002. Administrative and financing difficulties also delayedthe final PRSP. Significant progress has beenachieved in early 2004 inestablishing better organizational arrangementson the PRSP productionteam within the Government. The final PRSP is now expectedto be completed by September 2004; the first PRSP annual review is expectedto be completed by September2005. A householdsurvey was completed inJune 2004, anddata are currently beingprocessed. Participatory data and informationcollection has commenced(an HIV/AIDS survey was conducted, for example). Most sector reviews havenow been completed. Poverty-reducing expenditures stood at 7.3 percent of GDP in2003 andare projectedto increaseto 8.3 percent in2004 and2005. Policyperformance:Satisfactory progresshasbeen madeunder the PRGF arrangement approved inSeptember 2001. The fourth reviewwas successfully completed inFebruary 2004. The fifthreview is expectedto be completed inOctober 2004. The improved political and security situation, including inthe neighboring Liberia, has strengthened confidenceand helpedsustainthe economic recovery. Structural reforms have beenstrengthenedandlocal government elections were successfully heldinMay 2004. A ThirdEconomic Rehabilitation andRecovery Credit (ERRC 111) was approvedby the World Bank inMay 2003 to support the government's updated agendafor post-conflict reconstruction andpoverty reduction. Social andStructuralCompletionPointTriggers: Progressinimplementing the five remainingtriggers inhealth, education, governance, public expenditure management, and privatizatiodmining has been satisfactory. Decisionand CompletionPoints:Sierra Leonereachedthe decisionpoint inFebruary2002. The completion point is not likely to bereachedbefore late-2005, provideda full PRSPhas beencompleted as envisioned by the authorities, andimplemented satisfactorily for one year. CreditorParticipation:At decisionpoint, SierraLeonereceived financing assurances of HIPC assistancefrom creditors holding 84 percent of its debt. Most multilateralcreditors (the World Bank, the Fund, the ADB, the EuropeanCommissiodEIB) andParis Club creditors are providinginterimassistance. IFADandBADEA started providing assistanceinthe form of arrears clearance and will provide the rest of the assistanceat completion point. The governmenthas signed debt-rescheduling accords onNaples terms with ten out of eleven Paris Club creditors and on Cologne terms with six o fthem. O fthese six creditors, five have agreed to go beyond Cologne terms andprovide 100percent interimrelief. O fthe bilateral non-Paris Club creditors only Morocco has startedto provide HIPC interimassistance and has canceled all debt. China has agreedunder the African Initiativeto cancel all loans with - 46 - ANNEX I11 maturity up to 1999. For the remaining arrears China indicated that currently no payments need to bemade. Sierra Leone has nonethelessrequestedtreatment of the remainder, but there has beenno officialresponse yet. The Saudi Fundhas rescheduledoutstanding arrears, buton terms that fall short ofHIPC requirements. Validated commercial andmilitary debt mounts to about US$SO-100million, of which about US$35 million i s under litigation. Inabidto address the issue of outstanding debts owed to commercial creditors, the Sierra Leoneangovernment has so far adopteda "best- effort" approachto engage these creditors, with a view to rescheduling the verified arrears over a longperiod. Success so far has beenlimited. Furthermore, it is considering a debt buy-back operationunder the IDA debt-reduction facility. Zambia PRSP Status: A full PRSPwas received inApril 2002 andendorsedby the World Bankand IMFBoards inMay 2002. The first annualPRSPProgressReport, covering the period January 2002-June 2003, was submittedinMarch2004 andwas discussedby the IMF and World Bank Boards inJune 2004. The JSA concluded that Zambia's Poverty Reduction Strategy continues to articulate a sound set ofpolicies andprograms. However, despite satisfactory growth performance and some progresson reforms relatedto public expenditure managementprocesses, satisfactory implementation ofthe PRSP still needs to be established. An updatedPRSP ProgressReport, covering the periodJuly 2003-June 2004, is neededto demonstrate satisfactory implementation ofthe PRSP. Poverty-reducing spendingwas lower thanprogrammed, dueto limitedimplementation capacity andfiscal slippages. Priority poverty-reducing programs amountedto 1.8 percent of GDP in2001 andabout 2.4 percent of GDP in2002 and2003. PolicyPerformance:The PRGF arrangement, which was approved inMay 1999, expired at end-March 2003 without the completion of the final review. Agreement on a newthree-year PRGF arrangement could not be reachedbecauseof delays inthe privatizationof the Zambia National Commercial Bank (ZNCB) andbecause o f a large increase incompensation awardedto government employees inApril 2003. Agreement was reached on a SMP in July 2003 to runfrom July to December 2003. Performance underthe SMP was poor, owing mainly to weak expenditure management andpolicy that necessitatedthe authorities' request for anextension o fthe SMP through June 2004. Satisfactory progressunder the extended SMP ledto the approval of a newPRGF program inJune 2004. Socialand StructuralCompletionPointTriggers. One ofthe key outstanding completion point triggers is the successful implementation o fthe PRSP, as demonstratedby an annual progressreport. The recent Joint StaffAssessment of IDA andthe IMFof the first annual PRSP ProgressReport, however, concluded that satisfactory implementation ofthe PRSP i s yet to be establishedby the government. The implication of this conclusion is that anupdated PRSP progressreport, covering the periodJuly 2003 to June 2004, i s necessaryto conclude whether this trigger will have beenmet. HIPC completion point triggers inthe areas of HIV/AIDS, health, andeducation have beenmet. The government has also made - 47 - ANNEX I11 considerableprogresson the following completion point triggers: (i) commercialization of the Zambia Energy SupplyCompany (ZESCO); (ii) increasingthe discretionary budget share of education to 20.5 percent; (iii)the issuanceof bidding documentsfor the privatization of the ZNCB; and (iv) implementation ofthe MediumTermExpenditure Framework. Progress has beenrelatively slow inthe implementation of an Integrated Financial Management InformationSystem(IFMIS). DecisionandCompletionPoints:Zambia reachedthe decision point inDecember2000. The completionpoint, initially envisagedfor the endof 2003, couldbereachedby early 2005, provided the government successfully adheres to the conditions under the new PRGF arrangementanddemonstratessatisfactory implementation ofthe remaining triggers. CreditorParticipation:At decisionpoint, Zambia received financing assurances of HIPC assistance from creditors holdingabout 97 percent of its total debt. The World Bank, the IMF,the AfDB, the EuropeanCommission, andParis Club creditors have provided interim relief. IMF interimrelief expired at the endofDecember 2003. Indiahas written off 50 percent o f its claims (Government of Indialines o f credit) on Zambia. So far, Kuwait and Romaniahave sold their claims to commercial creditors, Bulgaria, China, Iraq, and Saudi Arabia have not signed agreements to provide HIPC reliefto Zambia but could do so after the completion point. B. Countriesthat CouldReachthe DecisionPoint after June2004 Burundi Burundihashadpost-conflict emergency assistance programs in2002 and2003, andrecent progress inthe peace processhas culminated inthe approval o f a PRGF-supported program inJanuary 2004. The program for 2004 aims at consolidating the peaceprocessand stabilizing the macroeconomic situation. The World Bankis currently supporting Burundi with the Economic Rehabilitation Credit and anumber of other projects plannedinthe context of a Transitional Support Strategy. That strategy, approved by the World Bank Board onMarch 7,2002, has underpinnedIDA assistanceto Burundi.Inaddition to the Economic Rehabilitation Credit, it envisages exceptional World Bank assistanceto Burundifor HIV/AIDS,capacity building, healthcare, demobilization andreintegration, andsocial action. The Arusha agreementof August 2000 representeda turning point. All but one ofthe major rebelgroups hasjoined the peaceprocess. After intensive political discussions, including with regional country partners to the peaceprocess, the timing of national elections to endthe transitional process has been set for October 2004. A newconstitution andelectoral and communal law remainto be agreed, however, as does anagreement on military integration of rebel forces leading upto the IDA-fundedDemobilization, Disarmament andRehabilitation (DDR)process. -48- ANNEX I11 PRSPStatus:Burundilaunchedits PRSP processinJuly 2000, andaJoint Staff Assessment ofthe I-PRSP was reviewedby the Directors ofthe World Bankandthe IMF inJanuary 2004. The World Bank has been providingassistance inconsultation andparticipatory diagnostic analysis. The Burundiauthorities recentlyrequestedfurther assistanceinthis area within the context of preparingthe full PRSP. Burundiis one o fthe first countries to seek assistance underthe Diagnostic Trade Integration Study program, which was done in2003. A fullPRSP,is scheduledfor mid-2005. HIPC Status:Burundifaces unsustainablyheavy debt-service obligations. A Paris Club reschedulingonNaples terms was granted inMarch2004. Iti s expectedthat a full DSA and preliminaryHIPC document will bepreparedat the time of the first reviewunderthe PRGF arrangementinlate 2004. Subject to satisfactoryprogram implementation, the HIPC decision point could be reachedbythe time ofthe second review inmid-2005. CentralAfrican Republic A civil conflict, which erupted inOctober2002, culminated ina coup d'Ctat inMarch2003. The conflict has taken a heavy toll on most sectorsofthe economy and on physical and economic infrastructure. A Post-Conflict EmergencyAssistanceprogram was approvedby the IMFBoardinJuly 2004 and couldpotentially leadto aPRGF arrangementinearly 2005 ifperformanceassociatedwiththe EPCAis satisfactory, andthe administrative capacityof the authorities is restoredto anappropriatelevel. The political situation has beengenerally calm since the transitional government has been installed inthe aftermath of the coup. A constitutional referendum i s scheduledfor October 2004, before legislative andpresidential elections inearly 2005. The World Bank approved a Country Re-EngagementNote (CRN) inJuly 2004. Inthe context of the CRN, the World Bank would provide support under its Low-Income Countries Under Stress (LICUS) facility to finance technical assistanceineconomic managementand to support the rehabilitation o fthe social sectors. The IMFprogramis expectedto catalyze muchneededbudgetary support from the EuropeanUnionandFrance as part of aconcerted international effort. PRSPStatus:The JSA ofthe I-PRSP stressed that the PRSPwould needto address weaknesses inthe preparation of the I-PRSP. Inparticular, the work leading to the preparationofthe PRSP would needto improve the statistical database; strengthenthe participatory process; better prioritize the objectives for poverty reduction; clearly define quantitative targets for poverty reduction inthe context of a detailed costing and financing exercise; and design an effective systemfor monitoringprogress inreducing poverty, including the tracking o f poverty outlays. The work on the full PRSP was delayeddue to political instabilityand conflict. However, the authorities have recently resumedthe preparation ofthe full PRSP. With the support ofUNDP, two household surveys were undertakenin2003 inurban andrural areas. The authorities are also building on the outcome - 49 - ANNEX I11 of ajoint assessment mission(JAM) ledby the World Bank inFebruary2004. The JAM workedwiththe authorities and civil society to assess the constraints andopportunities for socio-economic recovery inthe C.A.R. andidentify entry points where actions bythe government andappropriate donor support will lead to visible and quick pay-offs for its citizens. The authorities planto complete their full PRSPby mid-2005. HIPC Status: The C.A.R. has a sizable stock of arrearsanda very heavy debt burdenover the mediumterm. Currently, the C.A.R. has accumulated arrears to all its external creditors (except the IMF)including multilateralcreditors, notably the World Bank and the AfDB. The C.A.R. has been innon-accrual status withthe World Bank since June 2002. The country could be ina positionto benefitfrom the HIPC Initiative but would need to have a planin place to clear the arrears andto establish atrack record ofpolicy implementation under a Fund-supported program. Comoros Comoros has not had a Fundarrangementinplace since 1991. Disputes between Unionand Islandgovernments over competenciesandrevenue sharingledto mixedperformance under the SMP coveringthe periodJuly 2001-June 2002. A Transitional Agreement establishing joint governancebetweenUnionand Islandgovernments was signed on December 20,2003. InJune2004 the newlyelectedNationalAssembly, inwhichthe opposition to President Azali has a two-thirds majority, met for the first time. InmidJuly, a Union government was announced, includingpersonal representativeso ftwo ofthe islandpresidents, one of whom was giventhe finance portfolio. The IMF stafffeels that discussion on an SMP requires assurances on cooperation for coherent economic management, including the establishment of a consolidated budget. Inaddition, a broader andtimelier flow of information and statistics has beenurgedto permita meaningful monitoring of an SMP. The presidenthas promised to act on these issues andpresentthe Fundstaffwith the required information. Once this happens, an SMP missioncanbe fielded. PRSPStatus: The PRSPprocesswas initiatedinMarch2002, whenthe country was inthe processo f overcoming its secessionist crisis. Since then, for at least some time, the PRSP processprovedto be a useful tool to facilitate discussions betweenthe conflicting parties. An I-PRSP was produced and discussedthrough participatory workshops inMay 2003. Since then, the processcameto avirtualhalt, reflectingthe uncertainpolitical environment. The processcould berevivedunderthe auspiceso fthe newNationalAssembly. Modifications would needto concentrate on issueso f decentralization andthe designand implementation of coherent economic and social policies for the country as a whole. After such updates, the revised I-PRSP could be presented to the Boards ofthe World Bankandthe IMF. HIPC Status: The country's debt situation is clearly unsustainable,withNPV debt stocks of over 500 percent o f exports of goods and services, and ofmore than400 percent of domestic revenue in2003. Inearly October 2003, a Comorian delegation met withFundmanagement to explain the country's need for debt reliefunder the HIPC Initiative. Fundmanagement concurred with the need, but insisted on a track recordunder an SMP which would lay the -50- ANNEX I11 basis for an arrangement under the PRGF and allow Comoros to meet the entry requirements for the HIPC Initiative. Inlate December, aFundmission discussedwith the authorities the modalities for the negotiation of a SMP. Sincethen, the authorities have on anumber of occasionsrepeatedtheir call for steps toward debt relief under the HIPC Initiative. Large arrearsto the African Development Bank/Fundcomplicate the issue. Congo, Republic of The Republic of Congo has benefitedfrom a Fundemergency post-conflict assistance program in2002. Since then, despite some encouragingresults during the 2003 SMP, overall performance was not sufficiently strong to allow amove to a PRGF-supported program. A newsix-month SMP (covering January-June 2004) provides the authorities with an opportunity to develop a sufficient track record of policy implementation for a possible move to aPRGF-supportedprogram. The implementation of the 2004 Staff-Monitored Program (SMP) was broadly satisfactory through end-April.Particularly noteworthy are the efforts being made to enhance transparency andgovernance inthe oil sector operations and management. PRSPStatus:The preparationof an I-PRSP is at anadvancedstage andis expectedto be completed inthe third quarter of 2004. HIPC Status: With respectto the HIPC Initiative, it would be important for the Republic of Congo to establishthe necessary track recordfor a PRGF-supportedprogram. Onthe basis of the broadly satisfactory implementation ofthe SMP so far, the IMFstaff initiated negotiations inMay 2004 on aprogram that couldpotentially be supported by a new three-year arrangement under the PRGF. The conclusion ofthese negotiations would be conditional on continued good implementation underthe SMP through end-June 2004, and obtaining full financing assurances. A Fundmission i s planned for August 2004 to assessthe implementation ofthe SMP through June andto continue negotiations on a possible PRGF-supportedprogram. C8te d'Ivoire ProgressinPRGF-supported programs inCGte d'Ivoire has beenderailed since the outbreak of apoliticalcrisis inSeptember2002 resulting inCBte d'Ivoire not beingable to reachthe decision point inthat year. The implementation o f the Bank's Economic Recovery Credit (ERC), which hadbeen approved before the crisis inJune 2002, was also interrupted.Onthe political front, progresstoward reconciliation has proven difficult ina deeply polarized and territorially dividedcountry. The disarmament, demobilization andreintegration process has stalled, and the fundamental issues at the core ofthe crisis-nationality, rural landownership rights, and eligibility for the presidency-are yet to be addressed. The security andpolitical situation has worsened further since March2004. There have beenrenewed attempts since thento helpputthe implementation ofthe January2003 Linas-Marcoussis (LMA) peace accordback on track, includingthe most recent, thirdAccra Summit on the implementation of LMA, on July 29-30,2004. The fiscal situation suffered in2003 and 2004, as lack of - 51 - ANNEX I11 progress inpolitical reconciliation and innormalizing the security situation complicated budget implementation. Without access to fresh financing, the government accumulatedlarge external arrears. The agreementsreachedat the most recent Accra I11Summit heldin July 2004 with planneddemobilization to begininmid-October 2004 raised newhopes for durable peace. PRSP Status: The IMF and the World BankBoards endorsedthe I-PRSP inMarch2002. A first draft of the full PRSP was preparedinSeptember 2002 andreviewedby World Bank and IMF staff. The intervening conflict, however, delayed completionofthe PRSP and implementation of anti-poverty measures.Itis estimatedthat poverty increasedfrom an official 38 percent o fthe population before the conflict to about 42 to 44 percent after the conflict, includingthe large number of refugees. The PRSPprocesshas beenreactivated,but the completion ofthe PRSPwill haveto take into account worse economic andsocial "initial conditions" for mappingout a post-conflict poverty-reduction strategy thanhadbeen envisaged at the time of the I-PRSP. The Bankhasprepared a draft InterimTransitional Support Strategy (I-TSS) andtakenproactive measuresto restructure its portfolio toward the most urgent post-conflict needs. The politicaland security situation deteriorated duringthe opposition protests inMay 25-27,2004 that claimed at least 120 lives. Inthe aftermath, more ministersofthe opposition suspendedtheir participation inthe government. The resulting complete political impasse could ease up ifthe undertakings includedinthe final communiqud ofthe thirdAccra Summit on C8te d'Ivoire are actually implemented.The implementation of the Accra I11agreementwill likely determine the pace of completion of the PRSP. HIPC Status: With respectto the HIPC Initiativeandreaching ofthe decision point, this cannot be envisagedbefore a newprogram is put inplace andthe authorities have re-establisheda policy implementation track record. Such a track recordcould be established underthe IMFEmergency Post-Conflict Assistance(EPCA) program, for which C8te d'Ivoire could qualify, provided understandingsare reachedon an appropriate macroeconomic framework andminimumstructural reforms. Interms o fkey actions to reestablishatrack recordfor the Bankandthe Fund, there are likely to be three preconditions: (i) re-establishing andmaintaining the policy o fno debt-service arrears to the Bank andthe Fund; (ii) re-establishing a credible government o f national reconciliation; and (iii) someprogresstowarddemobilizationanddisarmament.Inaddition,puttingin making place a post-conflict programwith the Fundwith minimummacroeconomic policy and structural measureswould constitute key actions toward attaining a satisfactory track record. Lao People's Democratic Republic The thirdreview of Lao P.D.R.'s PRGF arrangementwas completed inSeptember 2003 at which time, the IMFBoard agreedon a one-year extension o fthe arrangement. Duringthe delay inthe third review, measuresto addressthe shortfall inbudget revenue in2002/03 were undertakenand structural reform measuresinthe bankingsector were strengthened.Recent macroeconomicperformance has beensatisfactory. The Laotiankiphas remained stable, and although inflationremains relatively highat around 12percent, this reflects mainly a surge in - 52 - ANNEX I11 food, fuel, and administered utility prices. The economy i s continuing to grow at a steady pace. Real GDP growtho f about 6 percent is expectedin2004, andthis should rise to close to 7 percent in2005 when a newcopper mine comes on stream. Concerns over the decline in fiscal revenue have causedthe fourth reviewto be delayed. A joint IMF Article IV and PRGF arrangementreviewmission was carried out at the end o f July 2004. The aim is to complete the fourth reviewinOctober 2004. The first tranche ofthe World BankFinancial Management Adjustment Credit was disbursed inJanuary 2003, andthe secondtranche was releasedinMay 2004, following the completion of all 17 actions. PRSPStatus:The World BankandIMFBoards consideredthe country's I-PRSP in April 2001. The first draft ofthe PRSPwas delivered bythe Lao authorities atthe endof May 2003. The final PRSP calledthe National Growth and Poverty-Eradication Strategy (NGPES) was approved by the NationalAssembly inOctober 2003, delivered to the Bank andFundon April 1,2004 andis expectedto bepresentedto the Boards inOctober 2004. HIPC Status:Inthe context ofthe Article IV consultation discussionsinJuly/August 2004, technical work on a DSA was undertakenby the staffo fthe World Bank, IMF, andADB. Thepreliminary findings were that althoughLao P.D.R. currently has ahigh stock of debt, debt-service flows inthe mediumterm are manageable, andthe level o f debt canbe steadily lowered, providedthat exports and GDP continue to grow robustly, progressis made in raising the ratio o frevenue to GDP, andthe government continues to adhere strictly to a prudentdebt managementpolicy. The results ofthe analysis are sensitive to the outcome of ongoing discussionsbetweenLao P.D.R. andRussia on debt owed to the former Soviet Union. Although it is likely that Lao P.D.R. would qualify for HIPC assistance after traditional relief, it i s uncertain ifthe authorities will seek HIPC relief. The decision point could be reachedfairly quickly provided Lao P.D.R. decidesto participate inthe HIPC Initiativeand stays ontrack with its PRGF-supportedprogram. Liberia Liberia's relations with the IMFdeteriorated steadily prior to the NTGL (National Transitional Government o f Liberia) taking office inOctober 2003. Liberiahas been in continuous arrears to the IMF since 1984andthe IMF Boarddecided to suspendthe country's voting and related rights inMarch 2003 due to aprotracted lack o f cooperation. Liberiahas not yet engagedinthe PRSPprocess. Intermittent civil wars have largely destroyedLiberia's physical and economic infrastructure andthe government's capacity to devise and implement policies. However, the NTGLhas shown commitment inimplementing a first set of fiscal and governancemeasures. Cooperation with the Fundhas improved interms of implementation ofpolicies, andtoken paymentsto the Fundresumedinearly 2004. On March 1,2004, the IMFBoard decidedto resume technical assistanceto Liberia. - 53 - ANNEX I11 InDecember2003, the UN,the WorldBankandthe IMFassistedthe government inaneeds assessment covering 10priority sectorsthat ledto a time- and cost-bound action plan, the Results FocusedTransitional Framework (RFTF), which was presentedat an international conferenceheldinNew York inFebruary2004. Donors pledged US$440 million for reconstruction needs and US$85 million for humanitarianassistance. Should arrears clearance be achieved, a post-conflict World Bank allocation would be sought, and a Transitional Support Strategy (TSS) would beprepared.This sequencei s likely to monitor Liberia's transition from the RFTFto a PRSP framework. HIPC Status:The stock of Liberia's external public debt amountedto about US$2.9 billion (600 percent of GDP) at the end of 2003. Nearly all of Liberia's external debt i s inarrears. For purposesof establishing a track record, relations withthe Fundwill needto be normalized and policies put inplace that will help start the process o f establishing a track record to meet the entry requirements(Le., either a EPCA or a Fund-supported PRGF progrw). Inrecent Boarddiscussions, FundDirectors have welcomed the resumption of monthly token payments toward arrears. They stressedthe needfor a continued track record of cooperation and strong policies to lay the basis for normalizingrelations with the Fund (andother creditors) over time. Myanmar Myanmar has not hada Fund-supportedprogram since 1981/82, and its Fundrelations have entailed annual Article IV consultations. The last consultation, concluded inMarch2004, noted that Myanmar's macroeconomic situation had deteriorated, although official statistics point to continued double-digit growth. The fiscal deficit spikedin2000/01 and, despite declining since, remains unsustainable. The deterioration inthe institutionalinfrastructure (including a distortionary dual exchange rate regime), the decline inhumancapital, and governance problems continue to erode Myanmar's development prospects.Near-term prospects have beenfurther underminedby anintensification of international sanctionsand a weak banking sector. The World Bankhas approved no newlendingsince 1987and does not have an active program inMyanmar. However, the Bankmaintains dialogue with key donors inMyanmarandprovidestechnical andanalytical inputinareas ofthe Bank`scomparative advantage. For example, a participatory assessment hasbeen completed by UNDP in collaboration withthe Ministryo f Planning, and a householdexpenditure survey is expected to be launched, on the content and designo fwhich the Bankhasprovidedtechnical assistance. Without active engagement with the World Bank andthe IMF, Myanmar is not engagedinthe PRSP process. HIPC Status:Myanmar is inarrearsto the World Bank andto other multilateral and bilateral agencies. Poor debt statistics make assessment ofthe debt burden difficult. Highly tentative estimates indicate that Myanmar's debt ratios exceedthe HIPC thresholds. Given Myanmar's poor relations with the international community andthe lack o f economic reforms, there is currently little prospect for moving beyond IMFsurveillance, the World Bank's LICUS approach, andthe requirementfor minimumdialogue andbasic due diligence inamembercountry. Without anactive engagementwiththe World BankandIMF, - 54 - ANNEX I11 Myanmar is neitherengagedinaprocessto proceedwith preparing anI-PRSP nor working to develop atrack record o f economic performanceto receive HIPC relief. Somalia Given the lack of a fully functional national authority and continued domestic conflict, Somalia is not expectedto proceedwithpreparing anI-PRSP. The Somali peaceprocess, which was launchedinOctober 2002 underthe auspicesofthe Intergovernmental Authority on Development (IGAD) has reachedits third and final phase. OnJanuary 29,2004, a broad cross-sectionof Somali leaders agreed on a framework for the structure and composition of the future government of Somalia. The inauguration of the transitional parliament,which will include Somalia's main factions, was scheduledoriginally for July 30 inNairobi, Kenya, but the formation of parliament i s the subject of current discussions. The World Bankprovided technical expertise duringthe secondphase ofthe processto the committee on economic recovery andtrade. The World Banki s also anactive memberofthe Somalia Aid Coordination Body(SACB), whichprovides a fiamework for UNagencies, international and SomaliNGOs, anddonorsto develop acommon approachfor the allocation of development assistanceto Somalia. There is no PRSP processinplace. HIPC Status: The Fundhashadno relations with Somalia andthe World Bankhasnot had an active.lending program inthe country since 1991. Somalia i s inarrears to both institutions. A joint World Bank/UNDP Country Re-EngagementNote was approvedin June 2003 by the World Bank's Board of Directors and is currently beingimplementedin Somalia. The following areas of intervention are beingpursued: (i) tosupport macroeconomicdata analysis and dialogue; (ii) creation o f an enabling environment for the livestock andmeat industry; (iii) coordinated action planto addressHIV/AIDS issues; and (iv) capacity-building for skills development andtraining centers. Incollaboration with other developmentpartners andthe donor community, these activities are being implementedwith the support ofaPost-Conflict GrantofUS$4.6 million. The World Bankis also currently undertaking a Conflict Analysis Framework for Somalia to ensure conflict-sensitive developmentassistance.The World Bank is also providing access to global electronic knowledge andresourcesto tertiary educational institutions. Sudan Sudanhasnot hada Fund-supported program since 1984, buthasbeenimplementing SMPs since 1997.Onthe peace front, anagreementinMay 2004 betweenthe Government of Sudanandthe SudanPeople's LiberationMovemenuSudanPeople's LiberationArmy resolvedall outstanding issues. The formal signing of the comprehensive agreementis expected inlate summer. Since mid-2003, the security andhumanitarian situation has deterioratedinDarfur(western Sudan). The government has made good progressin preparing anI-PRSP, which is near completion, andwork on a full nationwide PRSP, to be developedincollaboration with civil society, will begin once peace agreement is inplace. - 55 - ANNEX I11 HIPC Status: Sudan's economic performance underthe 2003 SMP was broadly ontrack. The IMFBoardhas agreedthat the quality ofpolicies envisagedunderthe 2004 SMP was equivalent to what would be requiredunder a Rights AccumulationProgram (RAP). A RAP could be initiatedonce the peaceagreementis finalized, the situation inDark i s stabilized, andthe appropriate financing assurances are secured. Somework hasbeen completed in recent months to lay the groundwork for a possible arrears clearance for Sudaninthe event that conditions improve sufficiently to allow for re-engagementby the international community. With the establishment of a Fund-supported program, Sudanwould have metthe entry requirements andcommencedthe establishment of atrack record. To this end, financing assurances are beingsought for clearing arrears to the Fund. Togo Togo had a Fund-supportedPRGF program approved in 1998.The stabilization program for 2002 yielded mixed results, as didthe April-December 2001 SMP, with someprogresson the structural front but a disappointing macroeconomic andfiscal performance. As indicated inthe last Article IV staffreport (SM/04/125,4/14/04), while the Togolese authorities are eager to enter into a new SMP, the possibility of an SMP hingesonthe track record ofpolicy implementation andthe normalization of relations with the EU. The government issueda draft I-PRSP inNovember 2002 onwhich donors' feedbackwas sought. InMarch2004, the I-PRSP was presented and discussedinthe Council of Ministers and a communique`was issued. The final I-PRSP will be validated ina national seminar and thenadoptedby the government. Itwillbesubmittedto the Bankandthe IMFonce a satisfactory macroeconomic framework is inplace. The World Bank is currently preparinga Country Re-EngagementNote scheduledfor Board discussion inthe thirdquarter of 2004. The Note will lay out an assistance strategy for Togo that describes the key steps toward the normalization of relations between Togo andthe Bank.InApril 2004, the government andthe EuropeanUnionlaunchedconsultations under Article 96 ofthe CotonouPartnership Agreement, which could leadto the resumption of financial assistance from the EUinthe mediumterm. HIPC Status: Inthe context ofthe November 2003 Article IV IMFstaffvisit, the authorities discussedwith Fundstaff a macroeconomic framework for 2004 that aims to demonstrate commitment to improve revenue mobilization and strengthen expenditure management, sustainthe on-going rehabilitationofthe phosphate sector, and lay a foundation for normalizingrelations withexternal creditors. - 56 - ANNEX I11 C. Countriesthat hadreachedthe completionpointby the end ofJuly 2004 Benin ExternalDebtIndicatorsAfter HIPCDebtRelief 220 , Benin: NF'V of debt-to-exports ratio 220 12 Benin. Debt service ratio 1 l 2 .-2oo 10 - +~ - 10 Updatedprojections 180 - - 180 8 - - 8 .-160 6 - .._ - - 6 Completionpoint projections 4 - - 4 100 c 100 2 4 I I 2 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2002 2003 2004 2005 2006 2007 2008 2009 2010 Beninreachedits completion point underthe enhancedHIPC InitiativeinMarch2003 andis expectedto receive debt relief of US$265 millioninnet presentvalue (NPV) terms (approximately US$460 million innominal relief). Benin's updatedNPV of debt-to-exports ratio at e11d-2003~' is estimatedto be 196percent.29 This represents anincrease of 41 percentagepoints comparedto the ratio estimatedat end- 2001 (155 per~ent)~'. updated figures follow the same declining trendbut remain above The as the completion point projections over the complete period of analysis (2004-10). The updateddebt-serviceratio also shows a declining trend, averaging 6 percent over the medium term. The depreciation o f the US.dollar against major international currencies and the decline indiscount rates from end-2001 to end-2003 are the mainfactors leadingto the increaseinthe dollar value ofthe NPV of debt relative to completion point projections. The effect of newdisbursementssince the completion point on the NPV of debt-to-exports ratio is almost offset by increasedexport earnings. Creditor Participation:Creditors holding 98 percent of Benin's debt at the completionpoint are providing HIPC relief. BADEA has recently approved its modality for the delivery of HIPC assistance, joining The World Bank, IMF, the AfDB, the AfDF, IFAD, the EU,the OPEC Fund, the IsDB, andthe BOAD, who were alreadyprovidingrelief. Only ECOWAS '*After fulldeliveryofenhanced HIPC assistanceandadditional bilateral debt relief. 29Updatedprojections inthis note might differ ffomthose inother staff reports on this country due to methodological differences outlined inAnnex I. 302001was the reference year inthe completion point document. -57- ANNEX I11 andBCEAO have not yet confirmed their participation inthe Initiative. The Paris Club agreedinApril 2003 to implementa stock-of-debt operation that would deliver infull its share of assistance. Furthermore, three (China, Kuwait, and Libya) out o f sevennon-Paris Club creditors have indicated their intention to provide HIPC relief. Finally, debt owedto Argentina, as well as debt heldby commercial creditors, was settled through buyback operations. Bolivia External Debt Indicators After HIPCDebt Relief Bolivia: NPV of debt -to-exports ratio 200 200 25 1 Bolivia: Debt service ratio 25 180 - Updatedprojections --180 Updated projections 160 - 15 15 140 - 120 - Completionpoint projections - 120 Completion point -*-. .*..-*...** * e - - * . . -*..'*- pro.jections 100 - * -4..4.. -4 - 100 5 - -- 5 80 80 0 4 L O 2000 2002 2004 2006 2008 2010 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Boliviareachedthe completionpoint underthe original and enhancedHIPC Initiatives in September 1998andMay 2001,andis expectedto receive debt relief o fUS$448 millionand US$S54 million inNPV terms, respectively. Intotal, estimated nominal assistanceunder bothInitiativesamounts to approximately US$2.1 billion. Bolivia's updatedNPV of debt-to-exports ratio31increasedfrom 117percent at end-200032to 176percent at end-2003 (a 59 percentagepoints increase). The updatedprojections exhibit a declining trend, but never reachthe levels projected at the time o f completionpoint over the mediumterm.33The mainfactors accountingfor the increaseinthe NPV of debt-to-export ratio are: (i) higherthanexpectedfiscal deficits andless concessional newborrowingthan expectedat the completionpoint, and (ii) export earnings compared to the completion lower 31 After full delivery o f HIPC assistanceandbilateral debt reliefbeyond HIPC. 32 Corresponds to the estimate presented inthe completionpoint document. Updatedprojections inthis note might differ ftom those inother staffreports on this country due to methodological differences outlined inAnnexI. - 58 - ANNEX I11 pointprojections. Changes inglobal interest rates as well as the depreciation ofthe US. dollar against the Euro also played a role inthe increase inthe ratio. Debt-service ratios are projected to behigher thanthat estimatedat the completion point. By end-2003 this ratio was estimatedat 20.9 percent, andi s expectedto decrease gradually to 13.3 percent by end-2010. Creditor Participation:Creditors holdingabout 95 percent ofBolivia's debthaveagreedto provide debt relief. All multilateral creditors are delivering their share of assistance, and virtually all bilateral agreements withParis Club creditors have beensigned.34Brazilhas also agreedto provide debt relief on comparableParis Club terms. O fthe three non-Paris Club creditors, assurances of debt reliefhave not beenprovided by BIAPE (Venezuela), China, and Taiwan Province o f China. BurkinaFaso ExternalDebtIndicatorsAfter HIPC DebtRelief Burkina Faso: NPVof debt-hexportsratio 210 ." 210 200 200 .*. ..4.. 8 - Completionpoint projectiopg =, .. 3.. -- 8 7 6 170 5 160 150 4 / 4 140 3 , ' 3 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2002 2003 2004 2005 2006 2007 2008 2009 2010 BurkinaFaso reachedits completion point underthe original and enhancedHIPC Initiatives inJuly 2000 andMarch2002 andis expectedto receive debtreliefofUS$229 millionand US$195 million inNPV terms respectively. An additional US$129 million inNPV terms was approvedas topping-up assistanceat the secondcompletion point. At end-2003 the updatedNPV ofdebt-to-exports ratio had increasedto 199percent, relative to 150percent at end-2001.35 The updatedratios decline after 2005 andby end-2010 34Underthe AgreedMinutesdatedOctober 1998andJuly 2001. 35The referenceyear for BurkinaFaso's completion point calculations was end-2001. - 59 - ANNEX I11 converge to the 181percent projected at the completion point.36Higher-than-projected export earnings, relative to the completion point projections help explain the sharp decline inthe profile. Debt-service ratios average 5.6 percentover the mediumterm and are 2 percentage points lower relative to completion point estimations. Creditor Participation:Creditors holding 76 percent of Burkina Faso's debt have startedto provide enhancedHIPC relief. O f sevennon-Paris Club creditors, Kuwait, and SaudiArabia have agreedto provide debt relief inamounts lower thanenvisagedunder the HIPC Initiative. ECOWAS has indicated that itwill not provide its share of assistance. Financing assurances for topping uphave beenobtained from the World Bank, the AfDB, BADEA, BOAD, the IsDB, the OPEC Fund, the EU, andParis Club creditors. Ethiopia ExternalDebtIndicatorsAfter HIPCDebtRelief Ethiopia: NPV of debt-to-exports 240 r-- 220 200 180 160 140 120 2003 2004 2005 2006 2007 2008 2009 2010 Ethiopia reachedits completion point underthe enhancedHIPC Initiative inApril 2004 and i s expectedto receive debt relief o f US$1.3 billion inNPV terms (approximately US$3.3 billion innominalterms) as well as US$0.7 billioninNPV terms intopping-up assistance. At completion point, the end-2003 NPV ofdebt-to-exports ratio after additional bilateral relief andtopping up was estimated at 150percent. The ratio peaks at 216 percent in2006 before modestly declining over the mediumterm to 206 percent in2010. This profile reflects an increaseinthe NPV o f debt after full provisiono frelief, explained mainly by expected ' newdebt disbursements inthe years following the completion point. The debt-service ratio is projectedto decrease from 7.7 percent in2004 to 6.9 percentby end-2010. The relatively 36 Updatedprojections inthis note might differ from those inother staff reports on this country due to methodological differences outlined inAnnex I. - 60 - ANNEX I11 modest debt service level over the mediumterm reflects the impact o f concessionalnew lending. Creditor Participation.Creditors representing92 percent oftotal HIPC Initiative debt relief estimatedat the decision point have given satisfactory financing assurances. Paris Club creditors have agreedinprincipleto provide assistance under the enhancedHIPC Initiative on Cologne terms. Non-Paris Club bilateral andcommercial creditors are expectedto provide treatment comparableto that of Paris Club, however, as o f June 2004 only Bulgaria, Hungary, andPoland have indicated their intentions to provide HIPC relief. The Ethiopian authorities will continue their effort to obtain HIPC Initiative relief from creditors that are not yet participating inthe Initiative. Ghana ExternalDebtIndicatorsAfter HIPCDebtRelief Ghana: NPV of debt-to-revenues ratio Ghana: Debt service-to-revenues ratio 10 150 140 \, 7 4 \ 1201 110 3 0 ~ 4-1 2003 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 Ghanareachedits completion point inJuly 2004 and i s expectedto receive debt relief of US$2.2 billion inNPV terms (approximately US$3.5 billion innominal terms). The completion point debt sustainability analysis shows that after HIPC assistance and additional bilateral relief Ghana's NPV of debt-to-fiscal revenues at end-2003 is 152percent, and is projectedto hover around 130percent until2010. The debt-service-to-revenuesratio is expectedto average 6.2 percent over the mediumterm. The completion point debt-ratio projections are predicated on a stable revenue-to-GDP ratio (21 percent on average), new borrowing that i s on highly concessionalterms anda significant portion o f its gross financing inthe form ofgrants. Creditor Participation: As ofMay 2004, satisfactory financing assurances withrespectto creditor participation inenhancedHIPC assistance for Ghanahave reached 89.6 percento f the total assistanceapproved inFebruary2002. The IMF, IDA,AfDB, andthe EUEIBhave provided interimassistance. Negotiations with Paris Club creditors were successfully concluded inJuly 2004, andmany creditors also agreedto provide additional assistance beyond HIPC relief on a bilateral basis. A number of non-Paris Club creditors have also - 61 - ANNEX I11 agreedto participate but have not signed any formal agreementsso far. KoreaandIndia are still innegotiations with Ghana. The authorities are actively seeking the official endorsement of the remainingcreditors. Guyana ExternalDebt IndicatorsAfter HIPC DebtRelief Guyana: NPV of debt-to-revenues ratio Guyana: Debt service ratio 3 2 0 / 3 2 0 300 8 - - 8 280 Updatedprojections 260 /------1- g*g 260 240 ....*. .*- Comlpetionpoint 220 projections 220 4 - - 4 *'. 200 200 2002 2003 2004 2005 2006 2007 2008 2009 2010 Guyana reachedits completion point under the original and enhancedHIPC Initiatives in May 1999 and December 2003 and is expectedto receive debt reliefof US$256 million and US$335 million inNPV terms, respectively (approximately US$1.4 billioninnominal terms). Guyana's updated debt ratios indicate that the NPV of debt-to-fiscal revenues ratio at end-2003 is estimated to be 243 percent, representingan increase o f 37 percentagepoints relative to the ratio at end-2002 (206 percent).37The updatedNPV debt-ratio projections show a risingtrendover the mediumterm, reaching 280 percent in2010.38The depreciation ofthe US.dollar against major international currencies andthe decline indiscount rates from end-2001to end-2003 are the main factors contributingto the increase inthe dollar value of the NPV o f debt relative to completion point projections. Newborrowinganticipated at the completion point outpacedfiscal revenue growth over the same period, which also contributed to the increase. Updated debt-service ratios are similar inlevel and trendto completion point projections andremainbelow 7 percent over the mediumterm. ''End-200 1was the reference year for completion point calculations. 38 Updatedprojections inthis note might differ from those inother staffreports on this country due to methodological differences outlined inAnnex 1. - 62 - ANNEX I11 Creditor Participation:Guyanahas received satisfactory financing assurances for 81percent o f HIPC assistance required. In2003, all Paris Club creditors and Trinidad and Tobago agreedto deliver reliefof US$95 millionthrough a stock-of-debt reduction. A numberofParis Club creditors indicatedthat they will provide additional voluntary bilateral relief. One multilateral creditor (CMCF) has not yet agreedto provide its assistance to Guyana. O fthe 12non-Paris Club official bilateral creditors, China, India, and Libya indicated their intention to provide their share of HIPC assistance. Mali 180 - 180 10 10 160 - - 160 8 8 140 -*.. -- 140 6 6 -*... 120 - ... .*'. -- 120 4 4 Completion ;oint projections 100 - - 100 2 2 80 7 f 80 0 0 Mali reachedits completion point under the original and enhancedHIPC Initiativesin September2000 andMarch2003, andis expectedto receive debt relief of US$121million andUS$417 millionin1998NPV terms, respectively (approximately US$895 millionin nominal terms). Updated debt ratios for Mali indicate that the NPV of debt-to-exports ratio for end-2003 i s 134percent, unchangedfrom end-2001.39 The updateddebt-ratio profile is similar to the profile estimatedat completion point, which is expectedto reach 130percent by 2010.40A higher level of export earnings over the mediumterm largely explains the improvement in the ratio relative to completion point projections from 2006.The significant increaseinthe level of exports over the 2001-03 periodoffsets the increaseinthe NPV o f debt due to 39End-2001 was Mali's reference year for the completion point. 40Updated projections inthis note might differ from those inother staffreports on this country due to methodological differences outlined inAnnexI. - 63 - ANNEX I11 parameter changes41and anticipated newborrowing over the same period. The updated debt- service ratio shows a decreasingtrendand is expectedto be less than 5 percentof exports fiom 2006 onward. Creditor Participation:As ofJune 2004, creditors holding about 85 percent ofMali's debt have started providing debt relief. Mali has received HIPC financing assurance from creditors holding 99 percent of its total debt. Only two multilateralcreditors (BCEAO and ECOWAS) andthree non-Paris Club bilateral creditors (Algeria, Cote d'Ivoire, and Iraq) have not yet agreedto provide debt reliefto Mali. Mauritania ExternalDebtIndicatorsAfter HIPC DebtRelief Mauritania: NPV of debt-to-revenues Mauritania: Debt service ratio 300- 300 16 16 Updated 14 14 250 - - 250 12 12 -- 200 10 10 8 8 - 150 6 6 100 - - 100 4 4 50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 23 ~ 50 0 2003 2004 2005 2006 2007 2008 2009 Mauritania reachedits completion point under the enhancedHIPC InitiativeinMay 2002 and i s expectedto receive debt relief of US$622 million inNPV terms (approximately US$l,1billion innominal terms). AnupdateofMauritania's debtratios indicate that theNPV ofdebt-to-fiscal revenuesratio at end-2003 is estimated to be 256 percent,42representingan increaseo f 55 percentagepoints relative to the ratio at end-2001 (201 percent). The updatedprofile is above the completion point projections until2006 whenthe expectedeffect of sharply increasing fiscal revenues from exports of crude oil helps reducethe ratio to 111percent by 2010. Prior to 2006, the key factors explaining the increaseinthe ratio relative to completion point projections is the 41 The depreciation o fthe U.S. dollar against major international currencies andthe decline indiscount rates from end-2001to end-2003 ledto an increase inthe dollar value o fthe NPV o fdebt over this period. 42 Updatedprojections inthis note might differ from those inother staff reports on this country due to methodological differences outlined inAnnexI. - 64 - ANNEX I11 depreciation ofthe U.S. dollar against major international currencies andthe decline in discount rates from end-2001to end-2003. The updateddebt-service ratios are estimatedto fall to 5 percent over the mediumterm as comparedwith 6 percent inthe completion point projection. Creditor Participation: Mauritania has received satisfactory financing assurances of HIPC assistancefrom creditors holdingabout 90 percent o f its debt. InJuly 2002, Paris Club creditors agreedto deliver a stock-of-debt reduction ofUS$l88 millioninNPV terms. The authorities have written to all non-Paris Club creditors to secure comparable treatment. O f the sevennon-Paris Club creditors, Algeria, Libya, and Iraqhave not yet provided irrevocable HIPC debt relief. Among Paris Club creditors, only Brazilhas yet to agree on HIPC debt relief. Mozambique ExternalDebt Indicators After HIPC Debt Relief 150 150 6 6 130 - - 130 5 5 110 -e,.. - 110 4 4 90 - *e..*-e. -90 3 3 70 - -e. -- 70 2 2 Completion point 5o projections a *..-*...*-- 50 1 1 3 0 1 , I I 4 , , 0 c 30 0 0 Mozambique reachedits completion point under the original andenhancedHIPC Initiatives inJune 1999andSeptember2001 andisexpectedto receive debtreliefofUS$1.7 billion and US$306 million inNPV terms, respectively (approximately US$4.3 billion innominal terms). An update ofMozambique's debt ratios indicate anNPV ofdebt-to-exports ratio of 130percent at end-2003, 17percentagepoints higher than end-2001 (113 percent).43The ratio shows a decreasingtrend over the mediumterm, reaching 87 percent by end-2010, but remains above completion point projections over the period.44The updatedprojections also 43 End-2001 was the reference year used for completion point calculations. 44 Updated projections inthis note might differ from those inother staffreports on this country due to methodological differences outlined inAnnex 1. - 65 - ANNEX I11 show the debt-service ratio averaging4 percentover the period, just above the 2.5 percent average estimated at completion point. The depreciationofthe US.dollar against major international currencies andthe decline indiscount rates from end-2001 to end-2003 are the mainfactors leading to the increaseinthe dollar value ofthe NPV of debt relative to completion point projections. A strong increaseinthe level of export receiptsover the 2001- 03 periodhas constrained the increaseinthe debt ratios. Creditor Participation:Creditors holding about 88 percent of Mozambique's debt provided financing assurances for HIPC debt relief. O fthe 16non-Paris Club official bilateral creditors, China, Kuwait, and South Afkica have signed agreements to provide HIPC assistance.Moreover, Algeria and Indiahavemade commitments to provide HIPC comparabledebt relief. The agreementwith Indiai s expectedshortly. Libya andPolandhave indicated their intention to participate inthe Initiative. Most Paris Club creditors have signed agreements committingto provide 100percent debt relief. Nicaragua External Debt IndicatorsAfter HIPC Debt Relief 190 11 7 -- I 1 Updatedprojections 180 10 - 10 ./ Completionpoint 170 "..* 170 9 ', projections 160 4 I 1 6 0 8 150 - i - 150 7 .a*Completionpoint 140 -i' ,,,u@&~:, 130t - 140 6 130 5 - - 5 Nicaraguareachedthe completion point under the enhancedHIPC Initiative inJanuary 2004 and is expectedto receive debt relief of US$3.3 billion inNPV terms (approximately US$4.5 billioninnominalterms). 45 Updateddebt ratios indicate that Nicaragua's NPV o f debt-to-exports ratio at end-2003 reached 164 a 25 percentagepoints increasecompared to the completion point 45 At the time o fthe completion point, the assistanceapprovedthe decision point was slightly increased due to revision o f exports anddebt data. 46 Updatedprojections inthis note mightdiffer ffomthose in other staffreports on this country due to methodological differences outlined inAnnexI. - 66 - ANNEX I11 estimate for end-2002 (139 per~ent).~' factors contributing to the increase are the Key decline ininternational interest rates and the weakening of the U.S. dollar against international currencies, whose impact outweighs the effect on the ratio of better than anticipated exports earnings. The updatedprojections for debt service-to-exports ratio are similar to the pathprojectedat the time ofthe completion point, andremain less than 9 percent over the period. Creditor Participation:Nicaraguahasreceived satisfactory assurances for about 87 percent of the debt relief required under the enhanced HIPC Initiative. All multilateralcreditors have delivered or intendto deliver their share of HIPC assistance infull. Additionally, in March2004, Paris Club creditors granteda stock treatment delivering their share of assistance under the HIPC Initiative. Regardingnon-Paris Club creditors, 17 creditors out of atotal of 24 have not agreedto provide debt relief. Nicaragua is the latest HIPC that has requested use of the IDA debt buyback facility. It is expectedthat US$270 million of its commercial debt will be bought back with support from the facility. Niger ExternalDebtIndicatorsAfter HIPCDebtRelief Niger: NPV of debt-to-exports ratio 200 Updatedprojection 190 Updatedprojection 180 10 10 170 170 160 160 140 Completionpoint'...... projections 140 2 - - 2 120130 0 4 L O ~ 2002 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 Niger reachedits completion point underthe enhancedHIPC Initiative inApril 2004 andi s expectedto receive debt relief inthe amount of US$521million inNPV terms. Inaddition, topping-up assistance inthe amount ofUS$143 million inNPV terms was approvedat the completion point. Total nominal debt relief, includingtopping up, was estimatedto be approximately US$1.2 billion. At completion point, the NPV ofdebt-to-exports ratio after full delivery of HIPC assistance (including topping up) was estimated at 150percent as o f end-2002. Updated debt ratios 47The reference year for the completion point document. - 67 - ANNEX I11 indicate the NPV of debt-to-exports ratio was 182percent at end-2003, gradually decreasing to 173 percentby end-201Os4*The higher NPV of debt ratio at end-2003 is explainedby the impact of lower discount rates and the depreciation o fthe US.dollar against major international currencies, bothhaving the effect o f increasing the dollar value ofNiger's external debt. After 2004, the debt service-to-exports ratio falls bellow completion point projections during our period o f analysis, reaching 5.8 percent by end-2010. Creditor Participation:Niger has received satisfactory financing assurances fiom creditors holding about 86 percent of its total debt. Among multilateral creditors, only ECOWAS, WAEMU Commission andFEGECE (Conseil de 1'Entente) have indicatedthat they would not participate inthe HIPC Initiative due to financial constraints. InMay 2004, Paris Club creditors cancelled 100percent ofNiger's obligations. Algeria, China, Kuwait, Libya, and the UnitedArab Emirates have indicated their intention to provide debt relief inthe context o f the enhancedHIPC Initiative. Senegal External Debt Indicators After HIPC Debt Relief 160 - t ' 160 12 - 12.0 150- '.. .-.*, * Updated projections - 150 10 - - 10.0 :*- 140 - .-140 8 - - 8.0 130 - 6 - -- 6.0 120 -*L;",,3 -- 120 ....-.*... ".* - 4.0 110 - Updatedprojections 100 7 7 100 2 3 k 2.0 Senegalreachedits completion point under the enhancedHIPC InitiativeinApril 2004 and is expectedto receive debt relief ofUS$488 million inNPV terms (approximately US$S50 million innominal terms). Anupdateof Senegal's debt ratios indicates that the NPV ofdebt-to-exports ratio at end-2003 is estimated to be 154 ercent, a decrease of 2 percentagepoints relative to the ratio at end-2002 (156 percent)!'The updatedratio is projected to decrease gradually to 103 48Updated projections inthis note might differ fiom those inother staffreports on this country due to methodological differences outlined inAnnexI. 49End-200 1was the reference year for completion point calculations. - 68 - ANNEX I11 percent by end-2008, about 6 percentagepoints belowthe completion point pr~jection.~' An upward revisionto government revenues comparedto the completionpoint assumptions is the key factor explaining the improvement inthe profile from 2005. The debt-service ratio is similar to the estimated completion point profile, remaining close to 4 percent of revenues in the mediumterm. Creditor Participation. Senegalhasreceivedassurances of HIPC assistance from creditors holdingabout 81percent of its debt. The World Bank, the AfDB, the EuropeanCommission, the BOAD, the IMF, and Paris Club creditors have provided interimassistance. The OPEC Funddeliveredits full share ofdebtreliefinNovember 2002. All Paris Club creditors have assuredparticipation and provision of HIPC debt relief. All but one o fthe multilateral development banks(ECOWAS) have, inprinciple, agreedto participate inthe Initiative.To date, no agreements with non-Paris Club have beensigned. Tanzania ExternalDebt IndicatorsAfter HIPC Debt Relief Tanzania: NPVofdebt-tceexports ratio Tanzania: Debt service ratio ~- 140 - 140 7 - Completionpoint e. *.e-. **.. projections 6 - - .+- - 6 130i 130 5 - - 5 120 *...*..-*---e--.*...+ ...* 4 - -- 4 110 .- 110 3 - --3 e.. . projections *a' 100 100 2 4 , 1 2 20012002 200320042005 20062007 2008 20092010 2002 2003 2004 2005 2006 2007 2008 2009 2010 Tanzania reachedits completionpoint underthe enhancedHIPC Initiative inNovember 2001 andis expectedto receive debtreliefofUS$2billioninNPV terms (approximately US$3 billion innominalterms). Tanzania's updated debt ratios indicate that the NPV of debt-to-exports ratio at end-2003 i s estimatedto be 140percent, 51 re resentingan increaseof 35 percentagepoints relative to the ratio at end-2001 (105 percent)?'The updated projections show a sharply decliningtrend 50 Updatedprojections inthis note might differ fiom those inother staff reports on this country due to methodological differences outlined inAnnexI. 5 1Updatedprojections inthis note might differ from those inother staffreports on this country due to methodological differences outlined inAnnexI. 52 End-2001was the reference year for completion point calculations. - 69 - ANNEX I11 over the mediumterm reaching 120percentin2010, still 5 percentagepoints higher thanthat projected at completion point. The depreciationof the U.S. dollar against major international currenciesandthe decline indiscount rates from end-2001to end-2003 are the mainfactors leading to the increase inthe dollar value ofthe NPV of debt relative to completion point projections. The growth inthe NPV of new borrowing was more than offset by the increase inexport revenuesover the 2001-03 period. Theupdateddebt-service ratioprofile is lower relative to completion point projections, averagingabout 5 percent of exports inthe medium term.53 CreditorParticipation:Tanzaniahasreceivedfinancing assurances ofHIPC assistance from creditors holdingabout 90 percentof its total debt. MultilateralandParis Club creditors have committed to deliver debt relief according to the terms o fthe HIPC Initiative, andmost Paris Club creditors have provided additional bilateral debt relief. As o f March 2004, among countries that attendedthe Paris Club negotiations, only Brazil has yet to sign abilateral agreement. An agreementwithJapan, covering a portionof total debt, has recently been signed. O fthe non-Paris Club creditors, Bulgaria, China, andKuwait have provided debt relief, while a few other countries have indicated their intentionto do so. Uganda ExternalDebtIndicatorsAfter HIPCDebtRelief Uganda: Debt service ratio 270 - Uganda: NPV of debt-to-exports ratio 270 250 - Updated projections -- 250 Updated projections 230 - 210 - 2002 DSAupdate ".= `. 190 - 8 - -- 8 -. *-.. =. 170 - '*....* 170 7 - -- 7 150 6 , r 6 T 1 1 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Uganda reached the completion point under the original and enhanced HIPC frameworks in April 1998 and May 2000 and is expected to receive debt relief of US$347 million and 53The change indiscount rates over the 2001-03 period does not affect the nominal stream o fdebt-service payments, allowingthe strong growth inexport revenues to more than offset the increase indebt service due to exchangerate changes. Moreover, the new borrowing that has occurred since the completion point was largely anticipated at completion point, implyingvery little change indebt service due to unanticipated new borrowing. - 70 - ANNEX I11 US$656 million in NPV terms, respectively. Nominal debt service relief under both frameworks amounts to approximately US$2 billion. Updated calculations indicate that Uganda's NPV of debt-to-exports ratio at end-June2003 reached258 percent, 87 percentagepoints higher thanthe estimatedend-2001 r a t i ~ .The ' ~ newestimates remainabovethe 2002 projections during the complete periodofanalysis." A key factor inexplaining this increasewas the reduction inglobal interest ratesandweakening o fthe U.S. dollar relative to other currencies (inparticular the Euro andthe Yen), which had a negative impact onthe NPV value of external debt indollar terms. New borrowing, largely inlinewithprojections inthe 2002 DSA, accountedfor some ofthe increaseinthe present value of debt betweenend-2001 and end-2003. The updateddebt service-to-export ratio profile i s similar to the 2002 projections anddeclines over the mediumterm, reaching 7 percent by 2010. Creditor Participation:Thirty-one creditors, corresponding to approximately 96 percentof total HIPC assistance, have agreedto provide debt reliefto Uganda. These creditors include the governments of India, Libya, Pakistan, andthe Republic of Korea, which have recently pledgedto provide debt reliefon official debt. The Easternand Southern African Trade and Development Bank (PTA Bank), Shelter Afrique, ISDB, Burundi, Iraq, Nigeria, Libya, and the UnitedArab Emirates have not committed to provide debt relief. The Ugandan authorities havepaidcreditors from Spain andhave reached settlement to pay out creditors from the U.K.andthe Former SFRYugoslavia. 54Reference year for the 2002 Debt Sustainability Analysis. 55Updatedprojections inthis note might differ ftom those inother staffreports on this country due to methodological differences outlined inAnnex I. -71 - ANNEX IV Box 1. Comparison of Debt Indicators Between HIPCs and Other Developing Countries The comparability o fNPV statistics derived from Global Development Finance (GDF) data (on developing countries) and HIPC documents and staffestimates (on HIPCs) is limited by the use o fdifferent methodologies to account for debt reliefand differences indebt coverage. Notwithstanding these differences, it is worth notingthat: Debt relief committed under the HIPC Initiative, once delivered, will reduce HIPCs' NPV o f debt-to- exports ratio to about 120percent, around the developing country average butbelow the average in non-HIPC low-income countries. 0 HIPC relief, including interimassistance, has already lowered HIPCs' debt service to about 10 percent o ftheir exports. Their debt service ratios are well below the similar ratios innon-HIPC low-income countries and significantly below those inother developing countries, reflecting the concessionality o ftheir debt. 0 Sustainable debt service-to-exports ratios inHIPCs are lower thanthat inother developing countries, reflecting HIPCs' highvulnerability to shocks. Debt Indicators for Developing Countries and HIPCs 1/ (Inpercent, weightedaverages) DevelopingCountries HIPCs21 Developing Low- Countries income Before Debt Debt After EnhancedHIPC Average 31 Countries EnhancedHIPC Indicators Indicators Reliefat the Completioi (2001) (2002) Relief41 for 2001 for 2003 Point 51 NPV of debt-to- exportsratio 61 120 143 274 275 206 121 NPV of debt-to- GDP ratio 38 39 61 65 45 29 Debt service-to- exports71 19 15 1681 10 10 7 Sources: GlobalDevelopmentFinance, World Bank; HIPC countrydocuments; and staff estimates. 11Figuresrepresentweightedaverages. SerbiaandMontenegro, Liberia, Somalia, and Turkmenistanhavebeenexcluded because of incompletedata. Debt indicatorsfor HIPCscover public andpublic guaranteeddebt whereas debt indicatorsfor developingcountries cover total public andprivatedebt. 21The term HIPC countriesrefers to those 27 countries that havereachedthe completionor decisionpoint under the enhancedHIPC Initiative by July 2004. 31Developingcountries comprise low- andmiddle-incomecountries accordingto the World Bank incomeclassification. 41 Debtstocksare aftertraditional ParisClub relief before the decisionpoint. Datarefer mostly to end-1998 andend-1999 data; for DemocraticRepublicof Congo, datarefer to end-2002. 51 Data are for 2006. 61Exports are defined as the three-year average of exports ofgoods andnon-factor servicesup to the date specified. 171Exports are definedas exports of goods andnon-factorservicesinthe currentyear. 81Average over 1998and 1999. I - 72 - APPENDIX - r! dW 'N"WoW\ ?- l 2 i? W ' v1 d 0 ZC??S F i i x W O - I- W -'i.-n C N e 0m 0 N c) N 0 0N 0 , CI g : f 0 0 0 N m m z . . 3 - 73 - APPENDIX Table 1B. Debt Servicefor Individual HIPCs that Reached Decision Points, by Country, 1999-2006 (In millions of USdollars, unlessotherwise indicated) Benin Debt service paid 66.0 54.5 36.2 33.0 30.9 Debt service due after enhanced HIPC Initiative relief I/ 30.3 33.5 36.6 Debt service/exports (inpercent) 17.1 15.8 10.1 8.9 6.3 5.5 5.6 5.6 Debt service/govemment revenue (inpercent) 17.3 14.6 9.4 7.2 5.2 4.7 4.8 4.7 Debt service/GDP (in percent) 2.8 2.4 1.5 1.2 0.9 0.7 0.8 0.8 Bolivia Debt service paid 249.4 268.3 260.5 274.9 374.0 Debt service due after enhanced HIPC Initiative relief 1/ 2/ 314.5 281.0 324.7 Debt servicfdexports (in percent) 19.0 18.3 17.1 17.6 20.1 14.7 12.7 14.2 Debt serviceigovemment revenue (inpercent) 12.7 13.7 14.1 15.6 21.8 16.7 14.7 16.6 Debt serviceiGDP (inpercent) 3.0 3.2 3.3 3.5 4.7 3.8 3.3 3.7 Burkina Faso Debt service paid 60.6 57.4 35.3 42.5 51.2 Debt service due after enhanced HIPC Initiative relief 1/ 44.1 43.4 49.3 Debt service/exports (in percent) 23.9 22.9 12.8 13.7 12.5 8.8 7.6 7.9 Debt service/govemment revenue (in percent) 15.8 18.6 11.4 11.4 9.2 6.9 6.0 5.9 Debt service/GDP (inpercent) 2.2 2.2 1.3 1.3 1.1 0.9 0.8 0.8 Cameroon 31 41 Debt service paid 401.0 437.2 260.9 223.1 279.5 Debt service due after enhanced HIPC Initiative relief 1/ 5/ 283.5 313.1 330.2 Debt service/exports (inpercent) 14.6 16.1 9.6 8.2 8.7 8.2 8.9 9.4 Debt serviceigovemment revenue (in percent) 24.1 26.3 14.9 11.7 12.3 10.5 10.9 10.9 Debt service/GDP (inpercent) 4.4 4.9 3.1 2.3 2.2 2.0 2.0 2.0 Chad 4/ Debt service paid 29.6 33.5 14.3 32.3 33.7 Debt service due after enhanced HIPC Initiative relief I/ 48.0 45.3 53.4 Debt service/exports (inpercent) 12.3 14.0 5.6 13.2 5.4 2.2 2.3 2.7 Debt serviceigovemment revenue (inpercent) 24.0 29.4 11.4 20.4 13.6 12.5 11.4 12.4 Debt service/GDP (inpercent) 1.9 2.4 0.9 1.6 1.3 1.1 0.9 1.0 DemocraticRepublic of Congo Debt service paid 2.7 ... 34.2 126.7 Debt service due after enhanced HIPC Initiative relief I/ 91.7 135.0 198.7 Debt service/exports (inpercent) 0.3 2.9 8.9 5.8 8.0 10.9 Debt service/govemment revenue (in percent) 1.4 ... 7.4 23.0 9.0 9.1 12.9 Debt service/GDP (inpercent) 0.1 0.6 2.2 1.4 1.8 2.5 Ethiopia 3141 Debt service paid 127.0 119.2 188.9 108.4 82.9 Debt service due after enhanced HIPC Initiativerelief 1/ 90.0 73.2 98.3 Debt service/exports (inpercent) 13.9 12.1 19.3 11.0 7.3 7.7 5.7 7.1 Debt servicekovemment revenue (inoercent) . . 11.0 10.2 15.5 8.9 6.7 6.3 4.6 5.6 I Debt service/GDP (in percent) 2.0 1.8 2.9 1.8 1.2 1.2 0.9 1.1 Gambia, The 21 41 Debt service paid 19.6 20.7 17.9 11.3 14.0 Debt service due after enhanced H P C Initiativerelief 1/ 18.3 12.3 14.7 Debt service/exports (inpercent) 15.0 19.5 19.2 10.8 14.0 12.9 8.2 9.4 Debt service/govemment revenue (inpercent) 25.5 26.6 28.4 18.7 25.0 26.0 17.6 19.9 Debt service/GDP (in percent) 4.5 4.9 4.3 3.1 3.9 4.9 3.1 3.5 Ghana 41 Debt service paid 521.5 533.2 242.6 267.0 161.0 Debt service due after enhanced HIPCInitiativerelief 1/ 161.6 135.1 133.2 Debt service/exports (inpercent) 21.1 21.9 10.1 10.2 5.2 4.8 3.8 3.6 Debt serviceigovemment revenue (inpercent) 53.4 78.1 25.7 39.1 17.1 15.5 8.7 6.8 Debt service/GDP (in percent) 6.7 10.7 4.6 4.3 2.1 1.9 1.4 1.3 Guinea 41 Debt service paid 131.5 143.8 72.5 88.0 85.8 Debt service due after enhanced HIPC Initiativerelief 1/ 88.0 82.2 82.8 Debt serviceiexports (inpercent) 17.6 19.6 9.0 11.2 10.7 10.9 9.3 8.8 Debt serviceigovemment revenue (inpercent) 35.3 45.5 21.3 22.8 22.8 23.2 19.9 18.8 Debt service/GDP (in percent) 3.8 4.6 2.4 2.7 2.4 2.5 2.3 2.2 Guinea-Bissau 41 Debt service paid 6.0 13.1 0.4 2.2 4.8 Debt service due after enhanced HIPC Initiativerelief l / 5.8 4.0 4.6 Debt service/exports (in percent) 10.7 21.1 0.9 4.3 9.4 10.5 6.7 7.3 Debt service/govemment revenue (in percent) 15.5 35.8 1.0 6.4 15.1 14.6 8.5 10.5 Debt service/GDP (inpercent) 2.7 9.4 0.3 1.7 3.1 3.6 2.2 2.5 - 74 - APPENDIX Table 18(continued). Debt Service for IndividualHIPCs that ReachedDecision Points, by Country, 1999-2006 (In million ofUSdollars, unless otherwise indicated) 1999 2000 2001 2002 2003 2004 2005 2006 Actual Projections Guyana 4161 Debt servicepaid 70.0 78.0 96.5 92.2 65.6 Debt servicedue after enhancedHlPC Initiative relief 1/ 32.8 30.3 33.1 Debt serviceiexports (inpercent) 10.4 11.4 14.5 13.8 9.5 4.6 4.4 4.8 Debt serviceigovemment revenue(inpercent) 35.0 34.4 43.9 39.5 28.1 13.5 12.3 13.1 Debt serviceiGDP (inpercent) 10.1 11.0 13.5 12.8 8.8 4.2 3.9 4.2 Honduras 7/ Debt servicepaid 239.8 175.1 210.9 208.5 229.8 Debt servicedue after enhancedHIPC Initiative relief 1/ 219.3 184.9 182.4 Debt serviceiexports (inpercentj 10.6 7.0 8.7 8.4 9.5 8.7 7.0 6.4 Debt serviceigovemment revenue (in percent) 23.0 16.4 18.1 17.3 17.7 15.6 12.6 11.8 Debt serviceiGDP (inpercent) 4.4 2.9 3.3 3.2 3.4 3.0 2.4 2.2 Madagascar 4181 Debt servicepaid 106.3 64.9 44.9 50.5 53.6 Debt service due after enhancedHIPC Initiative relief 1/ 74.8 72.7 78.4 Debt serviceiexports (inpercent) 11.7 5.5 3.4 6.9 4.7 6.2 4.9 4.6 Debt service/gove"ent revenue (inpercent) 25.0 14.4 9.8 13.8 9.5 15.2 13.5 13.1 Debt serviceiGDP (inpercent) 2.8 1.7 1.0 1.1 1.0 1.8 1.7 1.7 Malawi 41 Debt servicepaid 64.6 91.6 82.6 53.9 106.5 Debt servicedue after enhancedHIPC Initiative relief 1/ 53.0 61.6 121.8 Debt serviceiexports (inpercent) 13.0 20.5 17.2 11.3 23.1 10.4 11.7 22.3 Debt serviceigovemment revenue (inpercent) 20.5 32.5 29.4 18.1 30.5 13.8 16.6 29.6 Debt serviceiGDP (inpercent) 3.6 5.3 4.8 2.9 6.2 3.0 3.2 6.1 Mali Debt servicepaid 83.6 77.3 54.6 66.5 65.9 Debt servicedue after enhancedHIPC Initiative relief li 73.3 73.1 75.5 Debt serviceiexports (inpercent) 12.3 12.0 6.2 6.2 5.8 5.4 5.1 4.7 Debt serviceigovemment revenue (inpercent) 19.6 20.8 13.1 11.2 8.1 8.7 7.8 7.1 Debt serviceiGDP (inpercent) 3.1 2.9 1.8 2.0 1.5 1.5 1.3 1.3 Mauritania 91 Debt servicepaid 81.4 87.2 74.2 74.1 55.2 Debt servicedue after enhancedHIPC Initiative relief 1/ 56.3 55.4 55.6 Debt serviceiexports (inpercent) 22.4 23.0 19.2 19.4 15.7 13.4 12.8 7.4 Debt serviceigovemment revenue (in percent) 30.4 36.1 40.1 20.9 18.0 16.1 15.2 13.0 Debt serviceiGDP (inpercent) 8.5 9.1 7.5 7.5 4.9 4.5 4.1 3.2 Mozambique Debt servicepaid 60.2 18.0 27.1 42.0 49.7 Debt service due after enhancedHIPC Initiative relief 1/ 62.2 68.5 78.1 Debt serviceiexports (inpercent) 9.4 2.3 2.7 3.8 3.9 3.7 4.0 4.4 Debt serviceigovemment revenue (inpercent) 12.3 4.1 6.1 8.3 8.1 8.4 8.3 8.5 Debt serviceiGDP (inpercent) 1.5 0.5 0.8 1.2 1.2 1.2 1.2 1.3 Nicaragua 41101 Debt servicepaid 169.1 184.7 153.3 158.0 117.0 Debt servicedue after enhancedHIPC Initiative relief 1/ 106.9 73.4 101.0 Debt serviceiexports (inpercent) 20.3 19.3 16.2 17.5 11.7 10.1 6.5 8.5 Debt serviceigovemment revenue (inpercent) 29.7 23.3 20.1 20.0 13.5 11.4 7.3 9.6 Debt service/GDP (inpercent) 12.5 4.7 3.8 3.9 2.8 2.5 1.6 2.2 Niger 41 Debt servicepaid 18.9 22.4 34.1 53.0 24.8 Debt servicedue after enhancedHIPC Initiative relief 1/ 23.1 25.6 30.9 Debt serviceiexports (inpercent) 5.9 7.9 12.2 17.5 6.4 5.3 5.4 6.3 Debt serviceigovemment revenue (in percent) 10.6 14.5 18.8 23.0 9.2 7.2 7.1 7.7 Debt serviceiGDP (inpercent) 0.9 1.2 1.8 2.4 0.9 0.7 0.8 0.9 Rwanda 4/51 Debt servicepaid 37.0 37.3 17.9 13.6 12.6 Debt servicedue after enhancedHIPC Initiative relief li 13.6 10.0 15.7 Debt serviceiexports (inpercent) 39.0 24.9 11.4 10.3 10.0 9.9 6.3 9.0 Debt serviceigovemment revenue (in percent) 23.0 23.4 9.5 6.9 6.0 6.0 4.1 6.1 Debt service/GDP (inpercent) 2.4 2.1 1.0 0.8 0.7 0.8 0.6 0.8 - 75 - APPENDIX Table 1B(concluded). DebtServicefor IndividualHIPCs that ReachedDecision Points, by Country, 1999-2006 (In million ofUSdollars, unlessotbemise indicated) 1999 2000 2001 2002 2003 2004 2005 2006 Actual Projections SHo Tomb and Prlncipe 4/ Debt servicepaid 2.0 3.9 4.7 4.9 5.5 Debt service due after enhancedHIPC Initiativerelief I/ 16.1 6.9 2.7 Debt servicJexports(inpercent) 11.8 25.0 30.1 25.0 24.5 64.5 24.4 8.4 84Debt serviceigovemmentrevenue(inpercent) 21.4 38.7 46.4 39.2 35.8 94.6 40.5 14.8 Debt service1GDP inpercent 4.1 9.8 9.1 9.2 24.9 11.2 4.0 Senegal Debt servicepaid 178.0 253.4 242.1 311.8 444.6 Debt servicedue afterenhancedHIPC Initiativerelief 11 203.6 88.5 102.4 Debtservicelexports (in percent) 12.0 19.4 17.3 20.4 23.4 9.1 3.7 4.1 Debt service/gove"ent revenue(inpercent) 22.0 32.0 29.4 32.6 35.8 13.7 5.4 5.8 Debt service/GDP (inpercent) 4.0 5.8 5.2 6.2 6.8 2.6 1.1 1.1 Sierra Leone Debt servicepaid 36.5 52.7 94.7 21.0 19.9 Debt servicedue after enhancedHIPC Initiativerelief I/ 23.6 13.7 10.6 Debt serviceiexports (in percent) 39.6 48.1 82.1 14.7 10.9 10.3 4.7 3.0 Debt service1govemmentrevenue(inpercent) 77.4 72.7 90.6 18.4 16.3 17.9 9.1 6.3 Debt service1GDP(inpercent) 5.5 8.3 12.6 2.7 2.5 2.9 1.5 1.1 Tanzania 3/ 111 Debt servicepaid 193.0 154.4 92.0 109.0 100.3 Debt servicedue after enhancedHIPC Initiativerelief I / 129.6 150.0 150.6 Debt service1exports(inpercent) 16.2 11.8 6.4 7.3 5.8 6.9 7.4 7.0 Debt serviceigovment revenue(inpercent) 19.8 16.1 9.1 10.2 8.9 10.0 10.1 8.8 Debt service/GDP(inpercent) 2.2 1.7 1.o 1.2 1.0 1.2 1.3 1.2 Uganda31 Debt servicepaid 98.0 103.3 60.6 56.3 60.6 Debt servicedue after enhancedHIPC Initiativerelief l / 93.0 99.1 112.2 Debt serviceiexports (inpercent) 11.8 15.6 8.8 8.I 7.8 10.0 10.2 10.9 Debt service/govemmentrevenue(inpercent) 12.9 16.1 9.7 8.1 8.5 10.7 10.8 11.9 Debt service/GDP(inpercent) 1.7 1.8 1.o 1.o 1.0 1.4 1.4 1.5 Zambia 4/ Debt servicepaid 126.0 139.1 142.1 122.7 186.9 Debt servicedueafterenhancedHIPC Initiativerelief I/ 376.5 100.4 86.6 Debt serviceiexports(inpercent) 14.9 15.9 13.5 11.4 14.1 23.4 5.5 4.4 Debt service1govemmentrevenue(inpercent) 22.9 18.7 23.6 20.0 24.4 44.7 11.9 9.8 Debt service/GDP (inpercent) 4.0 4.3 3.9 3.3 4.3 7.3 1.9 1.5 Total debt service paid 4/ 3179.3 3224.2 2561.8 2554.8 2843.0 Total debt service due I/ 2733.5 2272.2 2564.2 Ratio of debt serviceto exports (in percent) Simple average 15.8 16.7 14.2 11.6 10.9 10.9 7.5 7.5 Weighted average 14.5 14.3 10.8 10.6 10.0 8.2 6.5 6.8 Ratio of debt serviceto government revenue (inpercent) Simple average 23.8 26.4 21.2 17.7 16.7 16.8 11.4 11.2 Weighted average 21.8 22.5 17.3 15.9 15.2 12.6 9.6 10.0 Ratio of debt service to GDP (in percent) Simple average 3.9 4.4 3.6 3.2 3.0 3.2 2.2 2.1 Weighted average 3.4 3.5 2.7 2.5 2.5 2.1 1.7 1.7 Sources: HIPC countrydocuments; and IMF staffestimates. I/DebtservicedueafterthefulluseoftraditionaldebtreliefmechanismandassistanceundertheenhancedHIPCinitiative.ForBoliviaandMozambique, these figures are also after additional bilateral assistancebeyondHIPC. 21 Debt serviceis higherthananticipatedat the decisionpoint due to highernew borrowing than previously projected. 3/ Onfiscal year basis, i.e. 2000 column shows FY 199912000, 41 Thedebt servicefigures for 2000 largelyreflect pre-HIPC reliefdebt servicebecausethese countries did not reachtheir decisionpoint until latein2000 or later. Thus, the full impact ofrelief for didnot takeeffect until2001and thereafter. 51 Debt serviceis lower thananticipatedat the decisionpoint dueto lower financing needsthan previously projected. 6/ Debt servicein2002i s higher than anticipatedat the decisionpoint becausethe completionpoint hasbeendelayed. 71 Hondurasreceivedlessinterim relief in2001thananticipatedat the decisionpoint. 8/ Therelief for Madagascaris indicative and subject to change. The MadagasyauthoritiesandParis Club creditorswould needto revisitthe outstanding bilateraldebt numbers. Also, minor adjustmentsneed to be incorporatedinthe case of threemultilateral creditors.Consequently, the IMFBoardapproved US$790 million inHIPC reliefwith the the understandingthat Madagascar'sexact level ofHIPC assistancewill be determinedonce such revisionsare made. 91 Debt servicefigures differ from those inthe decisionpoint documentdue to exchangeratechanges. 101Debt servicedue in2002103 reflects ahypothetical assumptionthat arrearsto non-Paris Club creditors(about U S 2billion) would beregularizedand serviced. It also reflectsthe resumptionofpayments to the Paris Club creditors that hadprovidedatotal deferralo fdebt serviceinthe wake of Hurricane Mitch in 1998, and upfiont paymentsassociatedwith debt reschedulingagreements. 11/Debt servicereflects some paymentsto commercialcreditorsand paymentson moratorium interestnot reflectedinthe completion point document. - 76 - APPENDIX \o 0 v l r 7 . t 0 d b v , N dlnd .-$ 2 2 2 .- ti 0 v) rlblnd 'ni cm\w ? 9 0 N 3 d 0 0 N U v1 2 C .I m 0 0 N .I .- v1 4 0 zco c1 e B e c1 5I c I - % c 'E N I s C 3 c c c N t- c1 c, a2 Px 2i3 Q Q a8 U z AaM C .I u 3-E 3 0 I 2> a2 4 N za2 b 0 .I 2U - 77 - APPENDIX Table 2B. Poverty Reducing Expenditure for IndividualHIPCsthat Reached Decision Points, by Country 1/ 1999 2wO 2W1 2002 2 w 3 2034 2 w 5 2004 Aowl Prelvnrnary Pmjections Benin PovertyReducmgExpenditureU I145 110.2 1610 162.2 179.9 2890 289.0 2890 PovertyRedwingExpenditurdGovemmcntRcvcnue(m percent) 30 0 29.5 41.8 35 4 30.4 45 2 41 4 37.4 PovertyR e d w qExpenditurelGDP(inpeioenr) 4.8 4.8 6.7 6 0 5 2 7.1 6.6 6 1 Balivla Poverty Rcdwmg Expenditure31 8820 8996 9782 981.6 959.4 I018 4 1080.6 1146.5 Poverty RcduomgExpendaure1GovemmmlRevenue(m percent) 251 44 8 45 8 52 8 55 9 56.0 54.1 56.4 58 8 PovertyReducingExpnditweiGDP (inperoent) 107 10.7 I 2 2 12 6 12.2 124 12 8 13 I BurltinsFua Poverty ReducingExpenditure4) 1138 98.1 135.4 156 7 237.2 271.7 3040 331.9 Poverty RedwingExpnditureiGovcmmcnt Revenue(in psr~snt) 29 6 31 9 43 5 42.0 42 6 42.6 42 0 40 0 Poverty RedwmgExpnditureiGDP (inperoent) 4 0 3.7 4 8 4 9 5 2 5 5 5 7 5.7 Cameroon PovertyReducingExpenditureU 264.0 2867 335.6 365 0 489.0 4996 5333 581.4 Poverty RedwingExpendJtureKjovemmcntRevenue(in percent) I5 8 173 19.2 19 2 21.5 18.4 18.6 19.2 Poverty ReducingExpendilurc1GDP (in percent) 2.9 3 2 3.9 3.7 3 9 3 4 3.4 3.5 Chad PovertyReducingExpenditure51 63.0 62 4 64.3 84.8 1128 198.7 2327 261.3 PovertyRedwmgExpenditweiGovmcnt Revenue(in percent) 50 0 54 8 51 4 53 7 45 5 51.7 58 7 60 7 Poverty ReducingExpnditurXDP (m percent) 4 0 4 4 3 9 4 2 4.3 4 4 4 6 4 9 D~marnHe Repuhlko f Conga Poverty RedwingExpenditure61 26 2 %.I 4380 459.9 482.9 PovertyRedmmgExpenditure1GavemmentRevenue(in percent) 5.7 I 7 4 43 I 31 0 31.3 Poverty RedwineExpenditweiGDP(m perom:) 0.5 1 7 6.5 6 3 6.0 Ethlopls PovertyRedwingExpenditure71 7100 5342 733.5 884.1 1W1.4 1291.6 1379.7 1522.8 PovertyReducingExpenditure/GouemmcntRevenue(tn percent)26/ 60 9 45 9 601 72 6 80 7 90.0 86.9 87.3 Poverty ReducingExpenditweiGDP(inpernent) I 1 0 8 2 I 1 3 14.6 15.1 17.6 17 5 17.8 The Gambia Poverty ReduclngExpenditure81 23 5 20 8 23.0 21 I 18.6 18.7 19.5 20.9 PovertyRcducingExpenditwKjovemment Revenue(inpercent) 30 2 26 7 36.5 35.0 33.2 26.6 28 0 28 2 PovertyRcducmaExpndiiurdGDP(m percent) 5.4 4.9 5.5 5.7 5.2 5 0 5 0 5.0 Ghana PovertyRsdwmg Expenditure91 3448 189.2 236.3 276.1 483.3 584.9 644.7 697.2 PovertyReduolngExpnditure/GovemmmlRevenue(in pcrcmt) 35 3 27.7 25 I 26.5 31 I 300 30.0 30 4 PovertyReduomgExpnditweiGDP (in perocnt) 4.4 3.8 4 5 4 5 6 3 6 8 6.8 6.8 G"ln'2. Povem RedwingExpenditureIO1 85.1 798 102.9 104.9 85 0 854 134.8 139.2 PovertyReducingExpenditurdGovemmentRwcnue(m percent) 22.8 25 3 30 3 27 I 22 5 22 5 32 6 31.5 PovertyReducingExpenditweKjDP (in percent) 2 5 2 6 3 4 3.3 2 3 2 4 3 8 3 7 Gulnu-Biimu PovertyRsdumg Expenditure21 6.3 7 3 7.6 8.0 8.6 PovertyReducmgExpenditureiGavemmenlRcvmue(in pcrocnt) 18 4 23 0 19.0 17 2 19.7 PovertyRcducmg ExpenditwelGDP(in percent) 4 9 4 8 4.7 4.5 4.7 Gu". PovertyRedwingExpenditureII/ 870 1465 1476 1507 1586 1575 1547 1595 Pavsrty Rsdwing ExpenditureiGovcmmentRevenue(in percent) 43.6 647 67.2 6 4 6 67.9 64 8 62.8 63 0 Poverty RedwingExpnditursiGDP (inpercent) 12.5 20.6 20.7 20 9 21.4 20.2 20.0 20 4 H0"l"nS Povsrty ReducmgExpenditure12/ 487.7 4764 638.4 493.7 512.5 625.0 662.7 7636 PovertyReducingExpnditureiGavsmmcnt Revenus(in percent) 4 6 9 44 5 54 7 40.9 39.6 44 4 45 2 49 5 PovertyRedwingExpenditweiGDP(mpercen1) 9 0 7.9 100 7.5 7 5 8 7 8 7 9.4 Mndngnur PovertyRedwingExpenditure131 1560 128.4 1478 1649 229.4 1995 2057 216.0 Poverty ReducingExpenditwe1Gavemment Revenue(inpercsnt) 36 7 28.4 32.2 45 2 40 6 40.6 38 I 36 I Povrrty ReducingExpnditurdGDP (in percent) 4 2 3.3 3.3 3.6 4 2 4 9 4 7 4 6 Malm1 Poverty Redwing Expenditure141 2080 161.0 1350 190.0 194.0 191.6 1969 2195 PovertyRedwing ExpendttureiGovmenIRevenue (inpercent) 661 57.1 48 0 63.7 55 5 50 0 53 0 53 3 PovertyRcdwmgExpnditwdGDP (m percent) 11 5 9 3 7.9 10.1 11.3 10.7 10.2 11.0 Mall PovertyReducingExpenditwe 151 1034 1496 1457 2031 3086 334 I 3565 381.4 Poverty ReducingExpenditwiGavemmsnlRevenue(inpercent) 24 3 40.2 34 8 34.3 38 0 39 6 38.2 35.9 PaverNReducingExpnditurdGDP (m percent) 3 8 5 6 4 8 6. I 7.1 6.6 6.5 6.4 Msudturi. PovertyRedwingExpenditure161 85.0 69 8 78.6 104 7 131.2 152.8 1682 187.9 PovertyRedwingExpenditureKjovemmentRevenue(in percent) 261 34.7 28.9 42.5 29 6 42.7 43.7 46 3 43.8 PovertyReducingExpnditue1GDP(inpercent) 9.0 7 3 8.0 106 117 12 1 12.5 11.0 Mozrmhlqur Poverty RedwingExpenditure171 543.0 629.8 590 6 642.4 7627 8533 9400 l W 7 9 PovertyRedwingExpenditure1GovemmentRevenue(in percat) 261 52.8 143.3 I45 5 127.1 1237 114.6 1138 109.7 PovertyReducingExpndiIurdGDP (m percent) 6.3 17.4 17.2 17.8 17 7 164 164 16.3 Nlesrsgu. PovertyRedwingExpenditure181 3429 3493 361 5 401 2 471.8 4957 525 I 5567 PovertyReducmgExpenditure1Govment RcvcnucOnpercent) 251 60.1 44.1 47.4 50.7 54.4 53 I 52 5 52 7 PovertyRedwmgExpenditweiGDP(m peroent) 15.5 8.8 9.0 100 11.4 11.5 11.7 II9 - 78 - APPENDIX Table 2 8 (concluded). Poverty ReducingExpenditurefor IndividualHIPCs that ReachedDecisionPoints, by Country 1999 2000 2001 2002 2003 2004 2005 2006 Actual Preliminary Projections Niger PovertyReducingExpenditure21 104.4 104.3 97.3 125.9 142.0 155.8 178.3 I93 4 PovertyReducingExpendiNre/GovernmcntRevenue(in percent) 58.2 67.5 53.7 54.5 52.7 48.6 49.4 48 2 PovertyReducingExpenditurelGDP (inpercent) 5.1 5.8 5.0 5.8 5.2 5.0 5.4 5.5 Rwanda PovertyReducingExpenditure 191 75.2 72.4 90.6 105.7 109.9 120.4 134 8 149.6 PovertyReducingExpenditurelGovernmentRevenue(in percent) 39.5 45.4 48.1 53.7 52.I 53.3 55 6 58.0 Poverty ReducingExpenditureIGDP(inpercent) 3.9 4.0 5.3 6. I 65 7.0 7.4 7.8 S h Tomb and Prfncipe Poverty ReducingExpenditure21 8 0 8.0 11.9 10.4 11.6 14.3 19.0 17.4 Poverty ReducingExpendiNreiGovemment Revenue(inpercent) 87.8 79.9 118.1 83.1 75.8 84.2 110.6 94 6 PovertyReducingExpenditureiGDP(in percent) 17.0 17.3 25.0 19.4 I96 22.2 30.6 25 6 Senegal Poverty ReducingExpenditure201 254.3 227.3 242.6 304.5 517.1 611.2 00 0.0 PovertyReducingExpenditureiGovemmentRevenue(inpercent) 30.8 28.7 29.5 31.8 41.7 41.0 0.0 0.0 Poverty ReducingExpendiNreIGDP (inpercent) 5.3 5.2 5.3 6.0 80 7.8 0.0 0.0 Sierra Leone Poverty ReducingExpenditure211 23.5 36.7 57.5 63 7 66.8 72.3 78 8 Poverty ReducingExpendiNrelGovementRevenue(in percent)261 32.3 35.1 50.6 52.0 50.6 48.3 46.6 Poverty ReducingExpendiNreIGDP (inpercent) 3.7 4.9 7.3 7.9 8.I 8 1 8.1 Tanzania Poverty ReducingExpenditure221 412.3 524 7 581.2 790.9 974.7 10383 1318.5 14477 Poverty ReducingExpenditureIGovement Revenue(in percent) 42.8 54.6 57.3 74.0 86 5 80.I 88.6 84.6 PovertyReducingExpendiNreIGDP(in percent) 4.8 5 8 6.2 8.4 I O 1 9.9 11.6 11.5 Uganda Poverty ReducingExpenditure231 306.0 402 5 447.5 553.1 719.9 874.0 885 6 860.5 PovertyReducingExpendiNdGovernment Revenue(in percent)261 40.4 62.6 71.3 79.3 100.6 101 1 96.9 91.2 PovertyReducingExpenditureIGDP(in percent) 5.3 7.I 7.7 9.7 12.2 12.7 I2 5 11.6 Z m b i s 3/ Poverty ReducingExpenditure24/ 166.0 149.0 66.4 89.6 101.0 105.7 154.8 171.0 Poverty ReducingExpendiNrclGovemment Revenue(inpercent) 30.I 20.1 11.0 14.6 13.2 12.5 18.4 19.3 Poverty ReducingExpenditureIGDP(inpercent) 5.3 4.6 1.8 2.4 2.3 2.I 29 3.0 Total poverty reducing expenditure 211 5,939.9 5,914.8 6,438.9 7,457.5 9,079.0 10,699.6 11,059.5 11,869.8 Ratio of poverty reducing expenditure to government revenue Simple average 42.3 46.0 50.0 47.7 49.7 50.6 50.4 49.3 Weighted average 40.9 41.3 43.5 46.4 48.5 49.3 46.6 46.4 Ratio of poverty reducing expenditure to CDP Simple average 7.0 7.2 7.9 8.0 8.5 9.0 9. I 8.9 Weiihted average 6.4 6.3 6.7 7.4 1.9 83 8.0 8.0 Sources: HIPCcouny daeuments; and IMF staff estimates I/Thecoverageofpovertyreducingexpenditurevariesacrosscountries,butisgenerallyconsistentwiththedefinitioninthePRSPandthebudget.Insome countries, the definition of poverty reducing expenditureshasevolved over t h e to include moresectors; therefore, some of the increaseinsuchspendingover the 1999-2003periodmay reflect changes in thedefinition. 21 Datarefer to healthand educationspending 31 Refersto poverty relatedspendingby the public sector. Includesspendingon health, education, basicsanitation,and selectedurban and rural development,both currentandcapital. Excludeseducationspendingat the university level, pensioncontributions, andhealthandeducationspendingby the Ministry o f Defense 41 Spendingon health, education, roads, youth andemplowcnt, promotion of women, agriculhlre,environmentandjustice 51 Spendingon health, education,rural development, inframucture, and goodgovernance. 61 Spendingon health, education,reintesation ofdemobilized soldiers,forestry andagriculture,water and sanitation, infrastmcture andrural development,and community facilities; for 2005-2006, amountestimatedbasedan HIPC assistanceprojectpd. 71 Spendingon health, education,rural infrastmcturs 81 Spendingoneducation,healthand agriculture 91 From2001onward, reflects GPRS definiuon of poveny expenditureby Federalgovernment,including primary bealthcare,basiceducauon, agriculture, rural water, feeder roads, and wal electricity (and total educationandhealth spendingbefore 2001). IO1 Spendingonjustice, agriculture,fisheries and acquaculture, public works, urbanization,health, social affairs, pdmary education, professionalandtechnical education. 111 Spendingon health, education, housing, water, andseverances 121 Spendingon education,health, water and sanitation,rural infrashucture, andsocial safety projects 131 Spendingon health, educationand water 141 Spendingoneducation,health, social security, welfare,housing, community andsosial development, publishing and broadcastingservices. I51 Spendrngon education,health, andsocial safetynets Ih/ Spendinganeducation,health, andpoverty reductionprogams 171 Spendingon health, education, inhstmctwe, agriculture, governance, andmacroeconomicmanagement. 181 Education,health, rural infrashucture and foodassistance 191 Spendingon intemal affairs,agiculture, cammerce,education, youth andsports, health, transponandcommunication,energy and water resources,gender, public service, landsandresettlement, and supportto local government. 201 Health, educationand promotionofwomen 2I/Spendingonhealth, education,social welfare, andsome economic services and security-relatedservices 221 Spendingon education,health, water, agricultural researchandextsnsion, lands, road%andthejudiciary 231 Spendingon health, education,PovertyAction Fund, some donor funded and administeredprojects 241 Coverageextendedsince2001: health, education. housing, welfare, informationservices,andgeneralsocial services 251 Level of gavemmentincludescentral, local, andpublic enterprises 261 Level of governmentincludescentral and local 271 For countrieswithout projections,the last availabledata are usedm the aggregatetotal for futureyears, thus understatingthe likely level of social spending. - 79 - APPENDIX U Q E U 0 B 8 saC 0 .-20a U T!3m v1 * -0 a .-2 a a .-8 -3 . a . a 8 0 00 t!0 C - 0 0 .e I, 1 .-d+0 & 3 0 .-0 m L n CI Y BL a -.- 0 d u BE8 L - 80 - APPENDIX "C "i u i 9 m o e i 2 ul - 81 - APPENDIX Table 5: Projected NPV of Debt in Excess of HIPC Threshold Ratios 1/ (In millionsof U.S. dollars) Parametersas ofthe Parameters as of end- DecisionPoint 21 2003 2/ Countries clualifving under exuort criterion Cameroon 0 0 Chad 11 194 Congo, Dem.Rep. of 0 0 The Gambia 79 135 Guinea 0 66 Guinea-Bissau 2 23 Madagascar 0 0 Malawi 154 349 Rwanda 131 207 Sao Tome and Principe 0 0 SierraLeone 0 0 Zambia 0 119 Countries clualifving under the fiscal window Honduras 0 0 Senegal 0 0 Total 378 1,093 MemorandumItem:Cost Breakdown IMF 17 110 World Bank 242 629 Other multilaterals 99 270 Other bilaterals 20 84 Source:Data on expectedcompletionpoint, exportsandgovernmentrevenuefrom country desks, multilateral disbursmentdata from the WB andthe IMF, and IMF and WB Staff estimates. 11 Countriesinthe interim period. 21 The parameters refer to the 6-monthaverage SDR CIRR and the end-of period USDJSDR exchange rate. - 82 - APPENDIX Table 6. HIPC Initiative:EstimatesofCoststo MultilateralCreditors and Status ofTheir Commitments (Inmillionsof U.S. dollars, in2003 NPV terms) Cost of ProvidingHIPC Relief Creditors 27 countries 37 countries Total 18,183 25,106 Deliveringor committed to deliveringdebt relief 1/ 18,108 24,984 World Bank Group 8,447 10,734 InternationalMonetary Fund(IMF) 2,825 5,168 African DevelopmentBank(AfDB) 3,028 4,05 1 Inter-AmericanDevelopmentBank (IaDB) 1,295 1,295 CentralAmerican Bank for Economic Integration(CABEI) 590 590 EuropeanUnionEuropean InvestmentBank (EUEIB) 713 904 International Fund for Agricultural Development(IFAD) 290 394 Arab Bank for Economic DevelopmentinAfrica (BADEA) 205 273 OPEC Fund for InternationalDevelopment 169 281 Islamic DevelopmentBank (IsDB) 144 199 CorporacihAndina de Foment0(CAF) 110 110 Arab Fund for Social and EconomicDevelopment(AFESD) 73 391 CaricomMultilateral ClearingFacility (CMCF) 66 66 West African DevelopmentBank (BOAD) 50 74 Fund for the Financial Development ofthe River PlateBasin (FONPLATA) 29 29 Nordic DevelopmentFund (NDF) 26 26 CaribbeanDevelopmentBank (CDB) 20 20 Arab Monetary Fund (AMF) 14 251 CentralBank of West African States (BCEAO) 7 39 Nordic InvestmentBank (NIB) 4 4 East African DevelopmentBank(EADB) 4 4 Banquedes Etatsde 1'AfriqueCentrale(BDEAC) 1 4 Asian DevelopmentBank (AsDB) 0 79 Havenot indicatedintentionsto providereliefunderthe HIPC Initiative 75 122 Banquedes Etatsde 1'AfriqueCentrale(BEAC) 37 37 EconomicCommunity ofWest African States(ECOWAS) 16 27 Easternand SouthernAfrican Trade and DevelopmentBank (PTA Bank) 9 9 Banquede Developmentdes Etatsdes GrandsLacs (BDEGL) 6 6 Conseilde L'Entente (FEGECE) 3 4 FondoCentroamericanode Estabilizacih Monetaria (FOCEM) 2 2 Fund for Solidarity and EconomcDevelopment(FSID) 1 1 Arab PetroleumInvestmentCorporation (APICORP) 0 35 Sources: HIPC documents; HIPC authorities; and World Bank staffestimates. 1/ Some o fthese creditors are providingrelief on acase-by-casebasis, andhave yet to agree to participationinthe entire HIPC Initiative. Moreover, for a few of these creditors, there have been significant delays indeveloping the modalities for the actual delivery ofdebt relief. - 83 - APPENDIX Table7A. HIPC Initiative:Status ofDeliveryof Assistanceby the WorldBank (In millions of U.S. dollars as of June 1,2004) Debt service reduction Member DecisionPoint Completion Total committed D '' ' debt service LU11.1 1,1,*S" r~uurr,ul.,. Under the Original HIPC Initiative21 Bolivia Sep. 1997 Sep. 1998 65.4 65.4 100.0 BurkinaFaso 31 Sep. 1997 Jul. 2000 182.8 182.8 100.0 Guyana31 Dec. 1997 May. 1999 60.8 60.8 100.0 Mali41 Sep. 1998 Sep. 2000 78.6 78.6 100.0 Mozambique 51 Apr. 1998 Jun. 1999 975.0 975.0 100.0 Uganda51 Apr. 1997 Apr. 1998 354.5 354.5 100.0 Total Original HIPC 1,717.0 1,717.0 100.0 Under the EnhancedHIPC Initiative61 Benin Jul. 2000 Mar.2003 124.3 27.1 21.8 Bolivia Feb.2000 Jun. 2001 221.8 28.0 12.6 BurkinaFaso 71 Jul. 2000 Apr.2002 236.7 29.0 12.3 Cameroon8/ Oct. 2000 Floating 265.6 63.9 24.1 Chad May. 2001 Floating 106.7 16.0 15.0 Congo, Dem.Rep. Of 91 Jul. 2003 Floating 1,031.2 29.6 2.9 Ethiopia71 Nov. 2001 Apr. 2004 1,278.4 67.7 5.3 Gambia, The Dec.2000 Floating 31.8 7.1 22.2 Ghana Feb.2002 Jul.2004 1,445.7 99.9 6.9 Guinea Dec.2000 Floating 233.6 39.8 17.0 GuineaBissau Dec.2000 Floating 179.6 16.5 9.2 Guyana Nov. 2000 Dec.2003 72.0 7.7 10.7 Honduras81 Jun. 2000 Floating 179.8 36.8 20.5 Madagascar Dec. 2000 Floating 436.7 54.9 12.6 Malawi Dec. 2000 Floating 588.5 67.2 11.4 Mali Sep. 2000 Mar.2003 213.2 40.0 18.7 Mauritania Feb.2000 Jun. 2002 172.8 25.3 14.6 Mozambique Apr. 2000 Sep. 2001 80.1 25.2 31.4 Nicaragua Dec. 2000 Jan. 2004 382.6 26.6 7.0 Niger 71 Dec. 2000 Apr. 2004 408.7 34.5 8.4 Rwanda Dec.2000 Floating 404.8 48.1 11.9 Si30 Tome andPrincipe Dec.2000 Floating 44.9 4.2 9.3 Senegal Jun.2000 Apr. 2004 163.9 45.3 27.6 SierraLeone Mar.2002 Floating 229.9 15.2 6.6 Tanzania Apr. 2000 Nov.2001 1,157.1 177.8 15.4 Uganda Feb. 2000 May.2000 629.1 65.4 10.4 Zambia Dec. 2000 Floating 885.2 80.0 9.0 Total EnhancedHIPC 11,204.7 1,178.8 10.5 GrandTotal 12,921.8 2,895.8 22.4 Sources:HIPC country documents; andWorld Bank staffestimates. 11 Assistance is consideredas provided i)at the effective date o fthe purchaseof IDA credits, provisionofIDA grants or prepayment of IBRDloans; andii)at the due date inthe caseofdebt service reduction. 21 Figuresare ftomthe respectivecompletion point documents, they includethe reduction ininterestpayments associatedwith the cancellationo floans andthe provisionofgrants insteadloans. Assistance providedthroughthe reduction ofthe debt service to IDA, unless otherwiseindicated. 3/ Assistanceprovidedthroughthe purchaseby the HIPC Trust FundofselectedIDA credits. 41Assistanceprovidedthroughthe purchaseby the HIPCTrust FundofselectedIDA credits andthe reduction ofthe debt serviceto IDA. 51Assistanceprovidedthroughthe provisionof IDA grants; the purchaseby the HIPCTrust FundofselectedIDA credits andthe reductionofthe debt service to IDA. 61 Unless otherwise indicated, assistanceto beprovidedthroughthe reductionofthe debt service to IDA. 71 Includestopping-up assistance. 81 Assistanceto beprovidedthrough: i)IDA grantswhichwould beusedto cover apercentageofIBRD debt service duringthe interimperiod(45 percent of IBRD debt service for Cameroon, 50 percent for Honduras); ii)an IDA credit to prepay all IBRDoutstanding debt at the completionpoint; andiii)areductionofIDA debt service. 91 Correspondsto the assistanceprovidedthrough the reduction of debt service paymentsto IDA onthe disbursedandoutstandingdebt as of end-2002, which wouldprovideareliefofUS$597 million inNPV terms.The remainingUS223 million inNPV terms neededto cover the WorldBank share o f assistancewas providedthrough the clearanceo farrears. -84- Table 7B. HIPCInitiative: Estimated Delivery ofWorld Bank Assistance, 2000-09 i n millions ofU.S. dollars) 2000 2001 2005 2004 2003 2002 2006 20072009 2008 Debt service before HIPC relief 1/ Benin 10 12 14 1816 16 19 22 21 Bolivia 31 2721 23 47 32 33 36 20 38 42 Faso Burkina 21 19 14 13 16 15 21 17 1717 17 Cameroon 38 80 49 87 56 5969 59 39 39 Congo,Dm. Rep. of 353 37 53 40 5242 45 8 Chad 12 16 14 15 49 18 22 19 Ethiopia 67 34 3663 42 54 71 74 85 90 Gambia, The 4 4 4 5 5 6 6 6 7 7 Ghana 56 63 86 65 76 123 115 108 93 101 Guinea 22 26 28 30 33 34 38 41 8 7 Guinea-Bissau 7 6 5 5 5 Guyana 2/ 6 8 8 8 8 6 7 7 7 7 Honduras 46 56 45 45 41 40 43 36 40 41 Madagascar 29 27 32 37 42 44 5748 52 61 Malawi 49 35 4736 42 58 54 56 64 Mali 21 20 27 23 24 2532 28 31 30 29 Mauritania 9 9 10 11 12 14 15 16 17 18 Mozambique 2/ 22 19 24 27 30 31 33 41 36 38 Nicaragua 18 12 18 12 17 15 10 12 20 23 Niger 14 1430 15 27 17 25 20 21 30 Rwanda 11 14 sao tome 20 16 19 26 2422 24 28 and Principe 2 2 1 21 1 2 2 2 2 Senegal 31 29 27 49 35 46 39 43 55 57 Sierra Leone 13 13 4 12 5 11 6 9 13 13 Tanzania 78 68 57 61 86 87 90 97 100 103 29 Uganda 53 34 42 72 65 71 75 81 85 27 Zambia 49 54 58 60 63 TOTAL 624 638 1,033 805 866 1,136 918 1,078 971 1,012 Debt serviceafter HIPC relief 8 Benin 10 1012 11 12 Bolivia afrer:original HIPC relief 13 17 27 32 33 36 38 42 47 28 enhanced HIPCrelief 24 21 20 19 18 8 14 Burkina Faso afrer: originalHIPC relief 10 168 13 9 11 12 I2 11 10 HIPC enhanced relief 7 1 6 9 l 2 3 3 , 3 I topping UP 8 0 I l 1 l 30 Cameroon 21 20 87 74 4121 30 7 16 Den.Rep. of 25 8 12 Congo, 7 9 8 9 10 8 Chad 6 79 9 10 11 12 13 32Ethiopia 26 17 34 35 47 34 44 36 38 topping up 34 35 I 7 26 21 10 I I 15 II 14 The Gambia, 3 31 Ghana 56 63 32 40 44 48 51 54 Guinea I8 10 11 14 16 1722 19 19 24 4 Guinea-Bissau 2 0 02 1 12 1 2 Guyana afrer:originalHIPC relief 6 6 7 7 4 4 5 5 5 5 enhanced HIPCreIief 6 4 5 4 2 2 2 2 2 2 Honduras 27 51 33 20 19 20 24 24 26 30 Madagascar 14 27 16 , 20 24 25 28 30 34 37 36 Malawi 25 24 18 22 28 29 30 35 Mali afrer: originalHIPC relief 16 19 21 2324 21 25 2926 27 enhanced HIPCrelief 14 9 IO I3 8 9 10 I I 11 12 Mauritania 3 5 5 4 7 6 8 7 9 9 Mozambique afrer: originalHIPC relief 9 11 12 I3 14 12 14 16 I6 18 HIPC enhanced relief 5 6 6 5 5 2 4 5 4 15 6 Nicaragua 12 6 6 5 5 8 4 Niger 14 14 11 13 14 toppingUP 14 4 5 7 7 6 7 8 9 9 Rwanda 5 4 11 1 2 8 6 5 5 6 Principetome and sao 1 0 0 0 0 0 0 0 0 0 Senegal 25 15 2228 16 24 27 29 33 35 4 Leone 3 Sierra 3 3 2 5 2 -85- Table 7B (concluded). HIPC Initiative: Estimated DeliveryofWorld Bank Assistance,2000-09 Qn millionsof U.S.dollars) 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Debt service afterHIPC relief Tanzania 29 22 25 32 37 38 40 43 45 47 Uganda 3/ 16 17 32 47 87 97 98 104 110 118 after orig~nalHIPCre&$ 13 14 23 33 57 63 64 67 71 75 enhanced HIPC relief 4 3 9 14 30 34 34 37 39 42 Zambia 27 14 13 17 13 15 16 18 20 22 TOTAL 487 350 315 345 343 356 390 418 450 507 TOTAL 227 137 132 117 133 144 152 158 182 212 TOTAL 209 133 128 112 127 138 145 150 174 205 World Bank debt relief 81 Benin 3 6 7 8 8 8 9 9 9 10 Bolivia 18 21 15 13 13 14 15 16 18 19 of which: original HIPC 5/ 18 21 6 enhanced HIPC 0 9 13 13 14 15 16 18 19 burkinaFaso 6 13 13 14 15 16 16 16 17 18 of which: origihal HIPC5/ 3 6 6 6 6 6 6 6 6 7 enhanced HIPC 3 7 7 7 8 9 9 9 9 9 topping up l l 1 2 2 2 2 Cameroon9/ 6 28 29 52 40 28 18 17 9 Congo, dem Rep. Of 4/ 329 25 32 34 37 40 42 43 chad 3.4 5 5 6 6 7 7 8 9 Ethiopia I 25 29 43 57 60 62 71 75 enhanced HIPC 1 25 29 31 33 35 36 41 43 topping up 11 24 26 27 30 32 Gambia, The 2 2 2 2 2 3 3 3 3 Ghana 33 45 49 53 57 60 64 68 Guinea 11 11 12 12 13 14 15 16 18 Guinea-Bissau I 4 4 5 6 6 6 6 7 7 Guyana I 4 4 4 4 5 5 5 5 5 of which: originalHIPC5/ l 2 2 2 2 2 2 2 2 2 enhanced HIPC 0 2 2 2 3 3 3 3 3 3 Honduras9/ 6 19 12 21 20 19 16 15 6 Madagascar 15 16 16 17 18 20 22 23 24 Malawi 17 19 21 23 23 26 27 28 30 Mali 6 13 14 15 16 17 18 19 19 20 ofwhich: original HIPC 5/ 4 4 4 4 4 4 4 4 4 4 enhanced HIPC 2 10 11 11 12 14 15 15 16 16 Mauritania 5 6 6 6 7 7 8 8 9 9 Mozambique 14 16 18 22 25 29 29 31 33 26 ofwhich: original HIPC 5/ 11 11 13 14 16 19 19 20 22 23 enhanced HIPC6/ 3 S S 8 9 10 10 11 12 3 Nicaragua 6 8 8 10 12 13 13 14 15 Niger 9 10 10 13 15 18 19 21 21 enhanced HIPC 9 10 10 11 12 14 1s 16 16 toppingup 2 3 4 S S 5 Rwanda 19 19 20 sao tomeand 12 14 15 16 17 18 Principe 1 1 1 1 1 1 2 2 2 senegal 5 14 15 11 11 18 19 20 22 23 Siena Leone 4 7 8 9 10 10 10 10 Tanzania 28 39 43 46 48 49 50 53 54 57 25 31 33 39 35 37 37 38 42 42 u$%ch: original HIPC5/ 17 20 20 20 8 8 8 8 9 9 . enhanced HIPC 9 11 14 20 27 29 29 30 32 33 Zambia 19 22 26 29 34 38 40 40 42 TOTAL 117 288 712 434 523 562 581 595 628 629 TOTAL 107 199 213 225 236 251 257 261 275 243 TOTAL 102 177 187 196 201 213 217 221 233 202 Memorandum item AverageAnnual Debt service 19% 45% 69% 54% 60% 61% 60% 59% 58% 55% Sources: HIPC countrydocuments;and World Bank staffestimates. 1/From2000to 2003, information correspondstodebt service actuallypaid tothe WorldBank Debt serviceafter2004arebased onstocksasofend-Dec. 2003. 2/ Debt service before the purchaseof IDAcredits. 3/ Thesenumbersdiffer from those in the completionpoint document,asthe documentdid-notreflectnew borrowingthat took 2nd place betweenthe original decisionpoint andthe enhanced decisionpint. 4/ Corresponds tothe assistanceprovidedthroughthereductionofdebt servicepaymentsto IDA on the disbursedand outstandingdebt asof end-2002, including the assistance deliveredthroughconcessional financingofthe bridgeloan to clear meanto IDAand IBRD 5/ Figures from the Completion Point Documentunderthe originalHIPC. 6/ These numbers differ from those in the2nd completionpoint document, as a new scheduleofdeliverywas approvedat end-January2003. 7/ Weighted by each country's sharein total debt servicebefore HIPC 8/From 2000to 2003,figures correspond to actualdebtrelief received. 9/ Countriesthatreachedthe 1/3limit for IDA interimrelief Deliveryofinterimreliefstoppedin March 2003 for Cameroonand July2002for for Honduras. Debt reliefafter 2004corresponds tothe originalrelief schedulesin the respective decision points. This schedule willbe adjusted once each country reachesits completion point, in orderprovide the totalrelief committed. to - 86 - APPENDIX Table SA. HIPCInitiative: Status of Commitmentsby the IMF (In millionsof SDRsas of end-July 2004) Amount Disbursed Member Decision Completion Amount Amount Point Point Committed Disbursed1/ (in percentof amount committed) Under the OriginalHIPC Initiative Bolivia Sep. 1997 Sep. 1998 21.2 21.2 100.0 Burkina Faso Sep. 1997 Jul. 2000 16.3 16.3 100.0 Cbte d'Ivoire 21 Mar. 1998 -_ 16.7 -- -- Guyana Dec. 1997 May. 1999 25.6 25.6 100.0 Mali Sep. 1998 Sep. 2000 10.8 10.8 100.0 Mozambique Apr. 1998 Jun. 1999 93.2 93.2 100.0 Uganda Apr. 1997 Apr. 1998 51.5 51.5 100.0 Total Original HIPC 235.3 218.6 92.9 Under the EnhancedHIPC Initiative Benin Jul. 2000 Mar. 2003 18.4 20.1 109.0 Bolivia Feb. 2000 Jun. 2001 41.1 44.2 107.5 BurkinaFaso 31 Jul. 2000 Apr. 2002 16.7 18.1 108.0 Cameroon Oct. 2000 Floating 28.5 5.5 19.5 Chad May. 2001 Floating 14.3 7.2 50.4 Congo, DemocraticRep. 41 Jul. 2003 Floating 228.3 2.3 1.o Ethiopia 51 Nov. 2001 Apr. 2004 26.9 28.1 04.4 Gambia, The Dec. 2000 Floating 1.8 0.1 4.4 Ghana Feb. 2002 Jul. 2004 90.1 90.1 00.0 Guinea Dec. 2000 Floating 24.2 5.2 21.3 GuineaBissau Dec. 2000 Floating 9.2 0.5 5.9 Guyana Nov. 2000 Dec. 2003 31.1 34.0 09.5 Honduras Jun. 2000 Floating 22.7 8.8 38.8 Madagascar Dec. 2000 Floating 16.6 5.6 33.9 Malawi Dec. 2000 Floating 23.1 6.9 30.0 Mali Sep. 2000 Mar. 2003 34.7 38.5 110.8 Mauritania Feb.2000 Jun. 2002 34.8 38.4 110.4 Mozambique Apr. 2000 Sep. 2001 13.7 14.8 108.0 Nicaragua Dec. 2000 Jan. 2004 63.5 71.2 112.0 Niger 61 Dec. 2000 Apr. 2004 21.6 24.1 111.8 Rwanda Dec.2000 Floating 33.8 14.4 42.7 SZio Tome & Prfncipe Dec.2000 Floating __ __ __ Senegal Jun. 2000 Apr. 2004 33.8 38.4 113.6 SierraLeone Mar. 2002 Floating 98.5 62.0 63.0 Tanzania Apr. 2000 Nov. 2001 89.0 96.4 108.4 Uganda Feb. 2000 May. 2000 68.1 70.2 103.0 Zambia Dec. 2000 Floating 468.8 351.6 75.0 TotalEnhancedHIPC 1,553.3 ' 1,096.7 70.6 Grand Total 1,788.6 1,315.3 73.5 Source: IMF Finance Department; also availableat www.imf.org/extemal/fin.htm. 11 Includesintereston amounts committed. 21Equivalentto the committed amount ofU S $22.5 million at decisionpoint exchange rates 31 Excludescommitment ofadditional enhancedHIPC assistanceof SDR 10.93 million subjectto receipt of satisfactoryfinancing assurances from other creditors. 41Amount committedis equivalentto the remainingbalance ofthe total IMFHIPC assistance of SDR 337.9 million, after deductingSDR 109.6 million representingthe concessional element associatedwith the disbursement ofa PRGF loanfollowing the DRC's clearance of arrearsto the IMF on June 12,2002. 51Excludescommitment ofadditional enhanced HIPC assistanceof SDR 18.19 millionsubjectto receipt of satisfactoryfinancing assurances from other creditors. 61Excludes commitmentof additional enhancedHIPC assistanceof SDR 9.664 million subjectto receiptof satisfactory financingassurances from other creditors. - 87 - APPENDIX Table 8B. HIPC Initiative: Estimated Delivery of IMFAssistance, 1998-2010 1/ (In millions of US.dollars) Actual Projections 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 IMFdebt servicebeforeHIPC6relief172/ Benin 14 16 16 16 12 9 6 4 2 2 1 Bolivia 42 34 31 32 30 30 36 32 25 18 11 2 0 Burkina Faso 4 6 11 15 15 18 19 16 12 10 6 3 1 Cameroon 20 20 21 5 3 12 20 33 40 40 36 22 9 Chad 11 5 2 4 8 10 12 14 13 8 6 4 2 Congo, Democratic Rep:. 2 3 0 0 570 5 5 5 5 64 126 129 129 Ethiopia41 3 7 12 14 15 16 13 10 8 13 13 11 9 Gambia, The 5 4 2 1 0 0 1 2 3 3 3 2 1 Ghana 133 72 39 68 17 22 39 48 37 47 41 23 15 Guinea 10 8 9 13 13 16 21 20 15 14 8 3 1 Guinea Bissau 1 1 1 1 2 5 3 3 3 2 1 1 1 Guyana 22 22 26 17 17 17 18 16 14 9 5 2 1 Honduras 3 7 10 14 44 41 15 26 22 22 21 13 1 Madagascar 15 13 6 3 5 8 9 12 20 16 13 13 11 Malawi 26 22 10 8 8 10 13 14 11 8 6 3 1 Mali 12 13 19 24 29 29 29 25 18 12 8 4 1 Mauritania 8 10 12 15 18 19 16 13 9 6 2 2 0 Mozambique 25 32 31 29 24 21 21 23 21 16 11 4 0 Nicaragua 1 4 7 7 7 9 17 26 26 26 24 13 1 Niger 14 6 3 2 4 9 13 13 12 9 4 1 1 Rwanda 4 9 13 12 7 2 6 10 12 12 10 7 3 Sit0 Tome and Principe 0 0 0 0 0 0 0 0 0 0 0 0 0 Sierra Leone 1 13 27 78 31 32 21 8 5 13 12 12 12 Senegal 63 34 25 31 30 39 38 41 31 22 12 5 1 Tanzania 41 39 36 32 27 27 26 31 48 59 64 48 38 0 Uganda41 58 60 53 50 44 45 51 46 36 25 13 2 2 Zambia 9 9 9 222 220 222 224 224 12 10 9 8 0 TOTAL 536 470 424 706 1203 677 703 735 474 493 455 331 203 IMFdebt serviceafter EnhancedHIPC Initiative relief2/ Benin 6 17 11 11 11 10 7 6 5 2 2 2 1 Bolivia 36 23 21 23 19 21 18 18 18 17 11 2 0 BurkinaFaso 4 6 8 8 9 4 6 13 9 8 6 3 1 Cameroon 20 20 20 4 3 12 14 24 30 33 30 15 9 Chad 11 5 2 2 5 6 8 11 11 7 6 4 2 Congo, Democratic Rep. 2 3 0 0 570 4 4 4 4 29 32 36 37 Ethiopia 41 3 7 12 14 10 10 7 6 6 6 6 7 6 Gambia, The 5 4 2 1 0 0 1 2 2 2 2 2 1 Ghana 133 72 39 68 8 5 13 23 23 24 24 22 15 Guinea 10 8 9 10 12 14 11 10 11 11 8 3 1 GuineaBissau 1 1 1 0 2 5 1 0 0 0 0 0 1 Guyana 22 15 17 6 10 8 5 4 5 4 3 2 1 Honduras 3 7 10 12 39 41 10 18 17 9 21 13 1 Madagascar 15 13 6 2 3 4 5 5 13 14 13 13 11 Malawi 26 22 10 5 8 8 5 7 5 1 4 2 1 Mali 12 13 18 17 19 18 16 13 10 6 4 4 1 Mauritania 8 10 7 7 7 8 7 8 4 4 2 2 0 Mozambique 25 18 0 2 6 9 7 7 5 5 5 3 0 Nicaragua 1 4 7 7 6 6 8 1 1 7 6 4 1 Niger 14 6 3 2 3 6 6 6 6 4 2 1 1 Rwanda 4 9 13 4 3 2 2 1 4 4 4 4 3 Sit0 Tome and Principe 0 0 0 0 0 0 0 0 0 0 0 0 0 Sierra Leone 1 13 27 78 2 2 1 1 2 1 1 1 1 Senegal 63 34 23 26 25 32 25 27 23 22 12 5 1 Tanzania 41 39 36 25 6 5 9 15 36 48 53 38 28 0 Uganda41 58 45 32 20 20 22 25 24 24 17 10 2 2 Zambia 9 9 9 71 67 70 220 3 7 10 9 8 0 TOTAL 530 423 333 406 870 339 446 277 291 304 264 188 96 - 88 - APPENDIX Table 8B (concluded). HIPC Initiative: Estimated Delivery of IMFAssistance, 1998-2010 1/ (In millions of U.S. dollars) Actual Projections 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 IMFOriginaland EnhancedHIPCInitiativeassistance5/ Benin ... ... 2 5 5 6 5 2 1 1 0 0 0 Bolivia 6 11 10 9 11 9 18 14 7 1 0 0 0 Burkina Faso 71 ... ... 3 6 6 14 12 4 2 2 0 0 0 Cameroon ... ... 1 1 0 0 7 10 10 7 6 6 0 Chad ... ... 0 2 3 4 5 3 2 1 0 0 0 Congo, DemocraticRep. ... ... ... ... ... 1 2 2 2 35 95 94 92 Ethiopia4171 ... ... ... ... 5 5 6 4 2 6 7 5 4 Gambia, The ... ... 0 0 0 0 0 0 1 1 1 0 0 Ghana ... ... ... ... 9 17 26 25 14 23 17 1 0 Guinea ... ... 0 3 1 2 10 10 5 3 0 0 0 GuineaBissau ... ... 0 1 0 0 2 2 3 2 1 0 0 Guyana ... 8 9 11 7 9 13 12 9 5 3 0 0 Honduras ... 0 12 0 0 0 1.. 0 1 5 5 8 5 Madagascar ... ... 0 1 2 4 4 7 7 2 0 0 0 Malawi ... ... 0 3 0 2 8 7 6 7 1 1 0 Mali ... ... 1 7 9 10 14 12 8 6 4 0 0 Mauritania ... ... 5 8 11 11 8 5 5 2 0 0 0 Mozambique ... 14 31 27 18 12 14 16 16 11 6 1 0 Nicaragua ... ... 0 0 1 2 9 25 25 19 18 9 0 Niger 71 ... ... 0 1 1 4 7 7 6 5 2 0 0 Rwanda ... ... 0 9 4 0 3 8 8 8 6 3 0 SZo Tom6 andPrincipe ... ... 0 0 0 0 0 0 0 0 0 0 0 SierraLeone ... ... ... ... 30 30 19 7 3 12 11 11 11 Senegal ... ... 2 4 5 7 14 15 8 0 0 0 0 Tanzania41 ... ... 7 21 22 16 16 12 12 11 11 10 0 Uganda41 ... 15 21 29 24 22 26 22 12 8 2 0 0 Zambia ... ... 0 151 154 152 3 221 4 0 0 0 0 TOTAL 6 47 91 300 333 338 257 458 183 189 191 142 107 Memorandum item: Average Annual Debt Service Reduction 6/ 1% 10% 21% 43% 28% 50% 37% 62% 39% 38% 42% 43% 53% Sources: IMF FinanceDepartment. 11 Under Original andEnhancedHIPC Initiative 21 Obligationsto the Fundas presentedinthe members'respectivedecisionandcompletionpoint documentsunder the enhanced HIPC Initiative, with revisionswhere necessary. 31 The figures for 1998-2002 shown inthe table representactualpaymentsmadeby the DRC to the IMF, including the settlement of its arrears on June 12, 2002. 41 Fiscalyear data. 51 UsingSDR/U.S. dollar exchange rate at the completionpoint (for original HIPC assistance) or at the decisionpoint (for enhancedHIPC assistance).Includesprojectedinvestmentincome. 61 Weighted average. 71 Excludingtopping-upassistance, which will be disbursedwhen the Funddeterminesthat the satisfactoryassurances for the disbursement of additional assistance have been obtained. - 89 - APPENDIX Table 9. Status of Bilateral Donor Pledgesto the HIPC Trust Fund 1/ (In millions of U.S. dollars as of June, 2004) Inception through end-September 2002 Since October 2002 4/ -raia...in Commitments Paid-in :ontributions .. Commitments Contributions YcIncludingEC-' EC-ACP Donor Contribution Bilateral Total ACP - Zontribution Bilateral Total Australia 14 14 14 Austria 18 26 44 44 6 6 Belgium 26 20 46 46 10 9 18 Canada 114 114 114 51 51 51 Denmark 15 45 60 60 5 15 20 4 Finland 10 25 35 35 3 13 16 13 France 166 21 187 187 60 11 71 Germany 160 72 232 232 58 60 118 Greece 9 3 12 12 3 2 5 2 Iceland 2 2 2 1 1 Ireland 4 20 24 24 1 1 Italy 86 70 156 156 31 31 61 Japan 200 200 200 56 56 19 Korea 10 10 10 61 Luxembourg 2 1 3 2 1 1 Netherlands 2/ 36 138 174 174 13 56 68 New Zealand 2 2 2 Norway 80 80 80 47 47 47 Portugal 7 15 22 22 2 2 RussianFederation 10 10 10 Spain 40 85 125 125 15 25 40 Sweden 19 58 77 77 6 26 32 Switzerland 60 60 60 33 33 33 United Kingdom 3/ 88 221 309 261 32 95 127 United States 600 600 600 150 150 EC-ACP Contributions 685 685 246 246 126 Total 685 2,575 2,575 2,527 246 945 945 315 Memo: Total contributions 685 2,515 2,515 246 945 945 315 Source:IDA I/Manydonorshavealsoprovideddebtreliefthroughotherinitiativesandmechanismsincluding: theDebtReductionFacilityforIDA-only Countries (providing financing for commercialdebt reductionefforts), specific country-heldmultilateral debt relieffacilities andthe Central American EmergencyTrustFund. Bilateraldonor funding for such measures has been(in US$ million) of: Spain-US$30; Norway-US$15.3;Netherlands-US$12.8; Switzerland-US$18.3;ItaIy-US$lZ; UnitedKingdom-US$l6.3; Austria-US$2.7; Canada-US$5.4;Germany-US$13.2; Sweden-US$23.4; United States-US$25; andDenmark-US$10.9 (through a bilateral trust fund administeredby IDB). These resourcesare not includedherewithas the debt relief underHIPC is additionalto these efforts. Figures inthe table might not addup due to rounding. 2/ In addition, the Netherlandsprovided US$20million for debt relief providedby the IMF to Zambiaover and above the debt reliefcalledfor under the HIPC DebtInitiative. This amount is not included inthe contribution amountpresentedabove. 3/ Inaddition, the United Kingdom contributed SDR31.5 millionto the HIPCTrust Fundfor the IMF for debt reliefto Uganda.This amount is not includedinthe contribution amount presentedabove. 4/ These figures correspondto the Chairman's Summary of HIPCTechnicalMeetingofOct. 24,2002, adjusted to take into accountthe new EC-ACP contributionsthat were includedas part of the EUMember States pledges.The bilateral attribution is basedon eachdonor's share inEDF9. Subsequentcontributions include Greece(EUR3 million), Korea ($10 million) and Russia($10 million). Many donorslinkedthe level oftheir additional pledges to specific funding gap estimates. Inaddition, a numberof donors have increasedthe amount oftheir pledges including Canada, Finland Finland, Norway, andthe UK. 5/ On May 16,2003, the ACP-EU Council bringingtogether Ministersfrom African, Caribbean, andPacific countries-and EUMember States approved anew contributionto the HIPC Trust Fundof EUR 200 million($246 million). This contribution is fundedfrom resourcesalready allocatedto EU-ACP co-operationthrough the 8th and9th EuropeanDevelopmentFund. 6/ Promissorynoteswith encashmentschedule. - 90 - APPNEDIX - 91 - APPENDIX - 92 - APPENDIX Table 10B.HIPC Initiative: ParisClub Debt Relief I/ Statusas ofJuly 2004 Dateof Enhanced Interim Toppingup or Dateof Paris country DecisiodCompletion Relief New Club Comments Point Provided? Rescheduling Rescheduling 1. Enhancedcompletionpoint reached Benin Jul-00/ Mar-03 yes new 23-Apr-03 ParisClub stock operationon Cologneterms. rescheduling Bolivia Feb-00/ Jun-01 yes new IO-Jul-01 ParisClub stock operationonCologneterms.No interim relief beyondoriginal HIPC rescheduling relief from the ParisClub. Burkina Faso Jul-00/ Apr-02 yes toppingup 19-Jun-02 ParisClub stock operationon Cologneterms. As the decisionpoint underthe enhanced HIPC Initiativeandthe completionpointunderthe original framework were reachedon the same day, creditorsdid not grantastock operationbut aflow reschedulingon Lyon terms. Ethiopia Nov-01/Apr-04 yes toppingup 13-May-04 ParisClub stock operationandtopping up onCologneterms. Ghana Feb-OZ/Jul-04 yes new 22-Jul-04 ParisClub stock operationonCologneterms. rescheduling Guyana Nov-00 / Dec-03 no new 14-Jan-04 ParisClub and Trinidad andTobago stock operationon Cologneterms. The majority of rescheduling ParisClub creditors(Denmark, France, Germany, the Netherlands, andthe UK)offered to provide completewrite-off of their debts Mali Sep-00 / Mar-03 yes new 12-Mar-03 ParisClub stock operationonCologneterms. rescheduling Mauritania Feb-00/ Jun-02 yes new 8-Jul-02 ParisClub stock operationon Cologneterms. rescheduling Mozambique Apr-00 / Sep-Ol yes new 20-Nov-01 ParisClub stock operationon Cologneterms. rescheduling Nicaragua Dec-00/ Jan-04 yes new 4-Mar-04 ParisClub stock operationon Cologneterms. Brazil declinedto participate. rescheduling Niger Dec-OZ/Apr-O4 yes toppingup 12-May04 ParisClub stock operationon Cologneterms including toppingup. Creditorspledgedto cancelall remainingmaturitiesonabilateral basis. Senegal Jun-OO/Apr-O4 yes new II-Jun-04 ParisClub stock operationon Cologneterms. rescheduling Tanzania Apr-00 / Nov-Ol yes new 14-Jan-02 ParisClub stock operationonCologneterms.Ina side letterJapanagreedto adeferral rescheduling over three years ofmaturitiesdueunder the 1997reschedulinginlight of the continuing delays insigningbilateral agreements. Uganda Feb-00/ May-00 yes new 11-Sep-00 ParisClub stock operationon Cologneterms. No interim relief from the ParisClub rescheduling beyondoriginal HIPC reliefbecauseofthe short time periodbetweendecisionand completionpoints. 1.Decisionpointcases Cameroon Oct-00 yes new 24-Jan-01 ParisClub providedaCologneflow reschedulingonpre-cutoff date debt inarrears rescheduling accumulatedduringOctober-December 2000 andall mamities onpre-cutoffdatedebt falling due during January 2001-December 2003. InDecember2003, creditorsextended the consolidationperiod inline with the extensionof the PRGF andagreedon the entry into force of the third phaseunder the 2001 Agreed Minute. Chad May-Ol yes new 12-Jun-01 ParisClub provided aCologneflow reschedulingon maturitiesonallpre-cutoff date rescheduling debt falling due during May 2001-March 2003. Arrearsonpre-cutoffdatedebt as of April 2001were rescheduledonNaplesterms. InApril 2003, the ParisClub decidedto extendthe consolidationperioduntilthe endofthe currentPRGFarrangement(Janwy 2004). Democratic Republic of Jul-03 yes topping up 17-Nov-03 ParisClub creditorsagreedto top-up their debtrelief to Cologneterms.Reschedulingon Congo Naplesterms coveringthe periodfrom 1 July 2002up to 30June 2005. Gambia, The Dec-00 yes n.a. 9-Jan-03 ParisClub providedaCologneflow reschedulingon the maturitiesfalling due from July 17,2002 to July 17,2005. Giventhe absence of Fundprogram, inOctober2003, creditorsagreedto senda letter informingthe authoritiesof the non-enhy into force of the secondphase of the consolidationperiodunder the January2003 AgreedMinute Guinea Dec-00 yes new 15-May-Ol ParisClub provided a Cologneflow reschedulingon pre-cutoff,non-ODAdebtfalling rescheduling due duringDecemberZOO(!-March 2004. Arrears onpre-cutoffdate debt outstandingat end-November2000 were rescheduledonNaplesterms. InJune 2003, ParisClub creditorsagreedthat inthe absenceof a Fundsupportedprogramthe third phaseof the 2001Agreed Minutewill not enter into force. - 93 - APPENDIX Table 10B(concluded).HIPC Initiative: ParisClub Debt Relief 1/ Status as of July 2004 Enhanced Dateof Interim Toppingup or country New Dateof ParisClub Decision Relief Comments Point Provided? Rescheduling Rescheduling Guinea-Bissau Dec-00 yes new 26-Jan-01 ParisClub providedaCologneflow reschedulingonpre-cutoffdate debt falling due rescheduling during December 2000-December 2003 (exceptthe paymentsonadeferral inthe context ofthe 1995 agreement,which were deferredagainonnonconcessionalterms). Arrears on pre-cutoff date debtwere rescheduledonNaplesterms. Giventhe absenceof a Fundprogram, inJanuary 2003, creditorsdecidedonthe explicit non-entry into force ofthe phaseenvisionedunder the Agreed Minute. Honduras Jul-00 yes new 14-Apr-04 ParisClub provided aCologneflow reschedulingonpre-cutoffdate credits inarrears as rescheduling of end-2003 andmaturitiesbetweenJanuary 2004 andJun2005.In2000, after Hondurasreachedthe decisionpoint, creditorsdecidednot to provideaHIPC treatment becauseHonduraswas benefitingform adeferral ofdebt serviceduringNovember 1998-March 2002, following HurricaneMitch. Madagascar Dec-00 yes new 7-Mar-01 ParisClub provided aCologne flow reschedulingonall pre-cutoffdate debt falling due rescheduling during December 2000-February 2004. InOctober 2003, creditors agreedto extendthe consolidationperiod inline with the extensionofthe PRGF(November 2004 ). Malawi Dec-00 yes new 25-Jan-01 ParisClub providedaCologne flow reschedulingonall pre-cutoffdate debt falling due rescheduling during December 2000-December 2003. Also, creditorsmovedthe cutoff date from January 1,1982 to January 1,1997, whichmade all of Malawi'sdebt, pre-cutoffdate debt Malawi's programunderthe PRGFarrangementwent off-track inJanuary2003, creditorsdecided onthe explicitnon-entryinto force of the phaseenvisionedunderthe 2001 Agreed Minute. InNovember2003, creditorsagreedto extendthe consolidation periodinline withthe extensionofthe PRGFarrangementto December2004. Rwanda Dec-00 yes toppingup 7-Mar-02 The April 2000 ParisClub reschedulingagreementonNaplesterms was topped up to Cologneterms(by mail) for the period December 2000-April 2002, whichwas subsequently extendeduntil end-June2004. S l o Tomi and Principe Dec-00 tobe toppingup 16-May-OO The ParisClub agreedinMay 2000to areschedulingonNaplesterms. However, phases provided 2 and 3 coveringthe period from May 2001 until April 2003 did not take effectbecause ofPRGFinterruptions. Sierra Leone Mar-02 yes toppingup IO-Jul-02 ParisClub provideda Cologneflow reschedulingonmaturitiesfalling dueonpre-cutoff date debt duringMarch 2002- September2004. Zambia Dec-00 yes toppingup 13-Sep-02 ParisClub provided a Cologneflow reschedulingonpre-cutoffdate debt falling due during Jan2001- March2003. InJune 2003, ParisClub agreedto providefinancing assurancesfor Zambia. Source: ParisClub Secretariat. I/Forthe27countriesthathavealreadyreachedthedecisionpointundertheEnhancedHIPCInitiative -94- Table 11: Paris Club Creditors'Deliveryof DebtReliefUnderBilateralInitiatives Beyond theHIPCInitiative1/ covered Countries ODA (In percent) Non-ODA Provision (in percent) of relief Pre-cutoff date debt Post-cutolfdate debt Pre-cutoff date debt Post-cutoff date debt Declsion point Completion (In percent) point (1) (2) (3) (4) (5) (6) (7) IPCs Australia l00 100 100 100 21 2/ 2/ Austria 100 Stock 100 flow - Case-by-case, Belgium mpcs 100 100 100 Stock 100 flow HIPCs Canada 31 - 41 - 41 100 100Stock 100 flow HIPCs Denmark 100 100 51 100 100 S1 Stock 100 flow s France 100 100 100 100 flow 61 Stock IPCs Finland 100 - 71 100 - 71 IPCs Germany 100 100 100 Stock 8/ 100flow Ireland HIPCs Italy 100 100 91 100 100 91 Stock 100 flow Japan 100 100 100 Stock the Netherlands, 100 100 100 90-100flow 101 Stock 101 PCs Norway I 11 I l1 l2/ 12/ Russia Case-by-case Spain 100 Case-by-case Stock 100 Case-by-case Sweden 131 HIPCs 100 Stock HIPCs Switzerland ' 100 l00 Case-by-case 100,flow 141 Stock s Kingdom United 100 100 100 100 151 100flow 1st Stock States United 100 100 100 100 161 l o o flow Stock Source: Paris Club Secretariat. I/ Columns (l) to (7)describe the additional debt relief provided following a specific methodology under bilateral initiatives and needreadas a wholefor each creditor. be to In column(l), "HIPCs" standsfor eligiblecountries effectively qualifying for the HIPC process. A"100percent" mention in the table indicates that the debt reliefprovided under.the enhanced HIPC Initiative framework willbe topped up to100percent through a bilateral initiative. 2/ Australia: post-cutoff date non-ODArelief to applyto debts incurred before a dateto be finalized; timing detailsfor both flow and stock relief are to be finalized. 31 Canada:includingBangladesh,Canadahasgrantedamoratorium ofdebt service asofJanuary 2001 on all debt disbursed before end-March1999for 13 out of 17HIPCs with debt service due to Canada. Eligible countries areBenin, Bolivia,Cameroon, Dem.Rep. OfCongo,Ethiopia, Ghana, Guyana, Honduras, Madagascar, Rwanda, Senegal, Tanzania, and Zambia. 100% cancellation willbe grantedat completion point. AsofJuly 2004, Canadahas provided completion point stockofdebt cancellation for Benin, Bolivia, Guyana, Senegal and Tanzania. 4/ 100percent ofODA claims have already been cancelledon HIPCs, with the exceptionof Myanmar's debtto Canada. 5/ Denmark provides100percent cancellationofODA loans and non-ODA credits contracted and disbursed before September27,1999. 6/ France: cancellation of 100percent ofdebt serviceon precutoff date commercial claimson the governmentas they fall due starting at the decision point.Once countries have reached their completion point, debtrelief onODA claims on the government willgo to a special account and willbe used for specific development projects. 7/ Finland no post-CODclaims S/ Germany proposesto cancel all debts incurred before June20, 1999provided a wnsensns among Paris Club creditom, is reached 91 Italy: cancellation of100percent ofall debts @re and post-cutoff date, ODA and non-ODA) incurred before June20, 1999(the Cologne Summit). At decision point, cancellation ofthe related amounts falling due in the interim period. At completion point, cancellationofthe stockofremaining debt. 1O/ TheNetherlands: 100percent ODA (pre- and post-cutoff date debt willbe cancelled at decision point); for non-ODA in some particular cases(Benin, Bolivia, Burkina Faso, Ethiopia, Ghana,Mali, Mozambique, Nicaragua, Rwanda, Tanzania, Uganda and Zambia), the Netherlands will write off 100percent Of the consolidated amounts on the flow at decision point; all other HIPCs will receive interim reliefup to 90percent reductionofthe consolidated amounts. At completion point,all HIPCs Will receive 100per cent cancellationofthe remaining stockofthe pre-cutoff date debt. 11/ Norway has cancelledall ODA claims. i2/ Due to the current WorldBanknMF methodologyfor recalculating debt reduction needs at HIPC completion point,Noway has postponed the decisions on whether or not to erant 100% debt reduction until atter the completion point. - 95 - APPENDIX 0 0 0 o C ) O O O O & m o o w m w 4 o o i r i o c1 y - - 9 0 . 9 ~ - Y W O O O 0.0. 9 9 9 0 0 0 0 0 0. 0. 9 9 9 c1 0 0 0 0 0 ' 4 9 9 9 9 0 0 0 0 0 4 - 9 9 3 O P I O O N N --, 00.O9 K o0. - P m o o o o o 0. 0. 0.9 0. 0 0 0 - w 8 ; o O O o O o o o o v i N 0 0 0 0 0 9 9 9 4 9 o o o v i o 9 9 9 9 " o o o o w 0 m 0 0 0 0 2- I- 0' 0' 0 0 T 9 9 4 0 9 9 9 9 9 - . 9 N O O O W O N o o o m o 0. 9 0. 0.9 0 0 0 0 0 - 96 - APPENDIX 9 9 9 9 9 9 9 m 9 9 0 . 9 9 " 9 0 , 0.10.0.0. 0 0 0 0 0 0 O N O O O 0 0 0 0 0 0 0 0 0 0 0 9 9 Y 9 9 0 0 0 0 0 B 9 4 9 9 0.0.9 9 0 . 9 9 9 9 - 9 9 0 0 0 0 0 0 O O O O O 0 0 0 1 0 0 0. 9 9 0. 9 9 9 9 0 . 9 0 0 0 0 0 0 0 0 0 0 9 9 9 " 9 0 0 0 p . 0 o o m o o 9 9 Y 9 9 N 9 9 9 0 . 9 O O O O O 0.a Y -. 0 0 0 0 0 m a . 0 - 97 - APPENDIX .I d vioooovi d 0 0 0 0 ~ 0 0 0 q 0 0 O o g o 0 0 0 - 0 W 0 0 0 0 0 I 7 0 0 0 0 0 N X 0 " 1 9 0 0 0 0 0 ~ 0 0 0 0 00 0 0 0 0 0 0 3 " O O O I 0 0N 0 o r j bI v) m * o o o o - g 8 " 0 4 0 r - ' O ' 0 0 0 0 0 0 0 O N 0 0 0 0 0 0 - 0 0 0 0 0 0 ~ 0 y o0 0 ~ 0 ~ I d O O O 0 0 0 O o s o 0 0 0 0 0 N 2 d " ' 9 0 0 0 0 z g 0 7 0 9 9 0 9 9 9 0 0 0 9 .-Fn - m o o o o o m 0 0 0 0 0 0 0 0 0 0 0 z 2 - d 0 0 0 0 $ v i W O O O V l 0,0,0,m0, -00,o. m N o o o m o d 0 0 v j o 4 q n .-0 ,I 0. 9 9 9 0. 0 0 0 0 0 I E -.-f -&?19.0000 9 0 0 N 0 0 ? 0 0 0 9 9 9 0 9 ? T o 0 0 0 o o o y ; o o o o o w 0 0 0 0 0 0 0 0 0 0 0 0 m o s .- Lf 0000v! 0 0 0 0 - r4- -~f m o o o a 0 0 0 00 0 0 ~ 00 0 0 0 0 0 0 - 0 0 , 0 , 0 , ~ 0 0 - 98 - APPENDIX 9 9 9 9 9 9 9 9 9 9 9 9 m o - 0 0 0 0 0 0 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9 9 " . 9 0 0 9 9 9 4 9 0 9 9 9 9 9 9 9 9 9 9 9 9 9 9 O O N O O O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 u , o o o o , o o o , q o , o , o , o o o o v l o o o 0 0 0 0 0 0 - 0 0 0 0 0 0 0 P 0 o o n o o 0 s ' 0 0 0 0 , 0 , 0 0 , 0 , 0 o , o o o , o o o o , o , o , 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ~ 0 , ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5 0 , 9 9 9 9 4 9 9 9 9 9 9 9 s 9 9 9 9 9 9 9 9 9 0 9 0 0 0 0 0 0 0 0 0 0 0 O O O h O 0 0 0 0 0 0 - 0 0 0 0 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 9 0 o q g o o ~ 0 0 0 0 00 0 0 0 0 0 0 0 ~ 00 0 0 0 0 o - r o o o -- 9 9 9 9 9 9 9 9 9 9 0 0 9 - 9 9 9 9 9 0 9 7 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 ~ 00 0 0 0 0 010000 9 9 9 9 9 0 . 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9 0 0 0 0 0 0 0 0 0 n 0 0 o o r o o 0 0 0 0 0 0 0 0 0 0 o o o , o , o , O W 0 O O 1 0 0 0 0 0 0 0 0 0 0 0 N , 0 0 , 0 0 0 0 0 0 0 0 O O O N O o , o o , y o 0 0 0 0 0 0 0 0 0 d - 99 - APPENDIX Table 12B. HIPC Initiative: Delivery of Assistance by Non-Paris Club Creditors Status as of July 2004 (Inmillions of U.S. dollars, 2003NPV terms) Creditor country Total costs Percent oftotal costs (In uercent) I.DelivereddebtreliefonallclaimsonHIPCs: SouthAfrica 1/ 4.4 0.1 Slovak Republic 31.0 0.9 Tanzania 3.7 0.1 Total 3Y.O 1.1 11.Committedto deliver debt reliefon all claims on HIPCs: Argentina21 4.4 0.1 Brazil 1/ 3/ 8.1 0.2 Cameroon 10/ 0.0 0.0 Honduras 112.0 3.3 Libya 41 238.8 7.0 Mexico 58.4 1.7 Morocco 5.4 0.2 Total 427.2 12.5 IIL Committeddebt relief onsome, but not all, claims on HIPCs: 5/ Algeria 211.8 6.2 Bulgaria 101.4 3.0 China 301.0 8.8 CostaRica 435.2 12.7 Cuba 2.2 0.1 Czech Republic 6.1 0.2 EBPt 11.0 0.3 Guatemala61 413.5 12.1 Hungary 15.4 0.5 India71 34.4 1.0 Kuwait 311.7 9.1 Oman 1.4 0.0 Pakistan 4.3 0.1 Poland 18.0 0.5 RepublicofKorea 6.3 0.2 Rwanda 8/ 0.9 0.0 Saudi Arabia 199.4 5.8 UnitedArab Emirates 9/ 90.4 2.6 Venezuela 63.8 1.9 Total 2,228.3 65.1 IV. Not yet committed to deliver HIPC relief: 101 #REF! Angola 27.7 0.8 Burundi 1.3 0.0 Cape Verde 1l / 0.2 0.0 Colombia 4.2 0.1 Congo, Dem. Rep. of 111 0.3 0.0 Cote d'Ivoire 11.2 0.3 Former Yugoslavia 96.8 2.8 Iran 62.3 1.8 Iraq 91.1 2.7 Israel 1/ 14.5 0.4 Namibia 0.5 0.0 Niger 1I/ 0.3 0.0 Nigeria 1.8 0.1 People'sDemocratic RepublicofKorea 24.6 0.7 Peru 8.7 0.3 Romania 39.2 1.1 Senegal lli 0.0 0.0 TaiwanProvinceofChina 343.9 10.0 Thailand 0.5 0.0 Togo 11/ 0.0 0.0 Zambia 1l / 0.2 0.0 Zimbabwe 1l / 0.1 0.0 Total 729.4 21.3 GrandTotal (I+II+III) 3,423.8 100.0 Sources:HIPC countrydocuments, country authorities;and staff estimates. 1/ Someclaims have beendealt with inthe context ofthe Paris Club. 2/ Previous informationon Argentina indicatedthat adebt buy-back hadtakenplacewith Guyana; recent information, however, indicatesthat this is yet to occur. 31 Previous informationon Brazilindicatedthat an agreementwith Bolivia hadbeensignedandwas expectedto be ratifiedby Parliamentbut recent informationhowever indicatesthat ratificationstill outstanding. 41 InSeptember2002, Libyaannounced its intentionto write off allclaimson HIPCs.However, it hasnot signed or finalized any bilateralagreementsfinalized or signed. 5/ In many cases, commitmentsto provide reliefmay only materializeat the completionpoint ofthe debtorcountries. 61 Guatemala'sclaims on Nicaraguawere taken over by Spain in a debt swap. Spainhasagreedto provide HIPC reliefto Nicaraguaon those claims. 7/ InJune2003, Indiaannounced its intention to write offall non-exportcredit claims onHIPCs.However, mostbilateral agreementshavenot yet beenfinalized or signed. 81 Rwandahas providednot agreedto provide HIPC reliefon its claim on theDemocraticRepublic ofCongo 9/ IncludesAbu Dhabi 10/Includingno informationreceivedby the staffsofthe WorldBank andthe InternationalMonetary Fund. 11/Total claimsare lessthan $0.5 million.