$50 billion debt relief for Sudan the biggest HIPC initiative ever – World Bank President
World Bank President, David Malpass, has described as the biggest HIPC initiative ever, the over $50 billion debt relief for North African country, Sudan.
Making the disclosure in a meeting with the Prime Minister of Sudan in the country’s capital, Khartoum, Mr Malpass averred the debt relief was enabled by a strong cooperation and resolve by the country’s lenders including private lenders to help clear its debts.
“In Sudan, for example, global cooperation that included the U.S., France and the UK helped the country clear its arrears with the World Bank, IMF and other IFIs, making possible more than $50 billion in debt relief in what will be the largest HIPC initiative ever,” said the Mr Malpass.
He therefore called for greater global cooperation, including private sector participation, to provide debt relief to the world’s poorest countries and fund growth-enhancing investments.
The heavily indebted poor countries (HIPC) are a group of developing countries with high levels of poverty and debt overhang which are eligible for special assistance from the International Monetary Fund (IMF) and the World Bank.
The HIPC Initiative was initiated by the International Monetary Fund and the World Bank in 1996, following extensive lobbying by NGOs and other bodies. It provides debt relief and low-interest loans to cancel or reduce external debt repayments to sustainable levels, meaning they can repay debts in a timely fashion in the future. To be considered for the initiative, countries must face an unsustainable debt burden which cannot be managed with traditional means.
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Assistance is conditional on the national governments of these countries meeting a range of economic management and performance targets and undertaking economic and social reforms.
Commenting on debt management strategies by developing countries, the World Bank President asserted that developing countries should eliminate wasteful public expenditures, make service delivery more efficient, and reallocate public resources to their most productive uses.
“This is also a time for proactive debt management to reprofile payments while international interest rates remain low. There need to be concrete steps to improve the transparency of debt contracts, increase accountability and ensure decisions draw on comprehensive information. Lower-income countries need to prioritize concessional financing and avoid the high interest rate financing that has become increasingly problematic. Focusing this agenda for each country and measuring the progress will be critical,” he stated.
“When the debt service suspension initiative – or DSSI – expires at the end of this year, low-income countries that resume debt service payments will see their fiscal space shrink to purchase vaccines and finance other priority expenditures. It’s time to pursue a gradual and people-oriented fiscal consolidation and restructure unsustainable debt. Enhanced and accelerated implementation of the G20’s Common Framework will be critical on this front,” he added.
