Many poor countries are heavily burdened by serious debt. It often dates back to the 1970s and 1980s, to the time when governments took out substantial loans. The result? A debt level that has become unsustainable, leaving the countries in question no longer able to repay their debts.
In September 1996, this situation resulted in the Heavily Indebted Poor Countries initiative (HIPC) launched by the World Bank and the IMF [Hyperlien3]. It is a concerted initiative involving all categories of creditors, including multilateral institutions. The goal? To allow heavily indebted poor countries to obtain debt relief from their creditors until the debt returns to a sustainable level. In return, the countries must implement a number of reforms to improve government management. Debt relief affords beneficiary countries some breathing space when drafting their budgets. It thereby allows them to allocate more money to the fight against poverty.
41 countries are involved, the majority in Africa up to now.
The initiative is supplemented by the Multilateral Debt Relief Initiative (MDRI). Heavily indebted poor countries that fulfil the conditions also benefit from integral relief of eligible debts from several multilateral organisations (World Bank, African Development Bank, IMF and Inter-American Development Bank).
Belgian contribution to the HIPC initiative
Between 2002 and 2009, Belgium reduced developing countries’ debt by almost EUR 2 billion.
Seminar “The slate is clean. What’s next? Conference on Debt Relief in Africa”, organised on 26 September 2012 in Brussels. Read more...