Covering Memorandum by the President of the World Bank and the Acting Managing Director of the IMF on the Heavily Indebted Poor Country (HIPC) Initiative and Poverty Reduction Strategy Papers (PRSP) - Progress Reports
April 14, 2000

HIPC Initiative - A Progress Report
April 14, 2000

Debt Initiative for the Heavily Indebted Poor Countries (HIPCs)

World Bank and IMF Endorse Country-Owned Poverty Reduction Strategies
December 22, 1999

Heavily Indebted Poor Countries (HIPC) Initiative--Update on Costing the Enhanced HIPC Initiative
December 7, 1999

Background Note on the Timetable for the Implementation of the Initiative for the Heavily Indebted Poor Countries(HIPCs)
Annex to HIPC Initiative -- A Progress Report

April 14, 2000

Status of Retroactive
   Country Cases
Burkina Faso
                    Côte d'Ivoire


In December 1999, the staffs of the World Bank and the IMF provided the Boards with an updated costing of the enhanced HIPC Initiative which included a timetable for the early HIPC cases.1 Subsequently, Bank and Fund staffs issued a news release2 that summarized the Bank and Fund Directors' views regarding the poverty reduction strategies. In this context, the Directors of the Bank and Fund have also reviewed the status of implementation under the enhanced HIPC framework, and endorsed an updated schedule under which three countries--Bolivia, Uganda and Mauritania--were expected to reach their respective decision points in early 2000. It was also mentioned that depending on policy performance and resolution of outstanding issues, five to eight additional countries, including Mozambique, could potentially arrive at their decision points by early spring.

Steady progress is being made in the preparation of preliminary and decision point HIPC documents. Under the enhanced HIPC Initiative five countries have reached their decision points and the completion point document for Uganda has been issued to the Boards. In addition, the Boards have considered the preliminary documents for two countries and more will be reviewed shortly.

It is expected that potentially up to 20 countries could reach their respective decision point by the end-2000. The actual timing of HIPC Initiative country documents will largely be dependent on performance of reform programs and the pace at which countries are able to prepare their interim-PRSPs.

In response to numerous requests, staffs briefly review the progress made to date in re-assessing the retroactive cases as well as the new country cases for which debt relief packages are either being or will be prepared in 2000.

Status of Retroactive Country Cases

Following the endorsement of the enhanced HIPC framework at the Annual Meetings last fall, staffs proceeded with a reassessment of the assistance required for the nine early HIPC cases (Benin, Bolivia, Burkina Faso, Côte d'Ivoire, Guyana, Mali, Mozambique, Senegal, and Uganda). Missions to update the debt sustainability analysis have been undertaken in seven of these countries where macroeconomic performance was broadly on track.

In January/early February, the Boards approved debt relief packages for Bolivia and Uganda under the enhanced HIPC framework. In March and early April the Boards also approved the debt relief packages for Mozambique and Tanzania. The status of preparation and expected timing for bringing the remaining countries to their decision points is set out below.


The authorities have indicated that they wish to seek debt relief under the enhanced HIPC Initiative. Delays in implementing key structural reforms have meant that the review under the second-year PRGF arrangement could not be completed as scheduled. Amongst the outstanding reform issues are the liberalization of the cotton sector (which has a major bearing on the rural poverty alleviation strategy) and the introduction of a performance-based compensation system for the civil service. In February 2000, Fund and Bank missions visited Cotonou to pursue discussions on an interim-PRSP, a program that could be supported by a new PRGF arrangement, and future IDA assistance. Based on these discussions, it is expected that the second decision point document for Benin could be ready in the second quarter of 2000.

Burkina Faso

The Burkinabè authorities initiated work on a poverty reduction strategy paper immediately after the 1999 Annual Meetings and staff from both the Bank and the Fund, and from a number of other donors, have been assisting them in this endeavor. The authorities plan to present their PRSP to the two Boards at the same time as the review for the Completion Point under the original HIPC Initiative. This is now expected in the second quarter of 2000 and a recent Bank/Fund mission has confirmed that the government's economic and structural program is broadly on track for that schedule. It is therefore expected that a document merging the completion point measures under the original framework with the presentation of the second decision point could be considered by the Boards in May.

Côte d'Ivoire

Political uncertainty and slippages in the reform agenda have slowed down the presentation of Côte d'Ivoire's second decision point document. A constitutional referendum is to be held in April 2000 and general elections are planned before end-October. The government's fiscal targets for end-December were not achieved, and the implementation of structural adjustment measures met with delays, including in the areas of tax reform, privatization, and governance. However, the transition government has taken some positive steps in economic and sector management and started the preparatory work for an interim PRSP. A Fund mission will be in Abidjan in March/April to conduct discussions on the 2000 Article IV consultation and a staff-monitored program covering the period April-September 2000. The presentation of the next structural adjustment operation to the World Bank Board is being postponed until agreement has been reached on a new macroeconomic framework supported by a PRGF arrangement.


Agreement on the Economic and Social framework to be supported by the enhanced HIPC Initiative framework has not yet been reached in Guyana. A Fund mission visited Guyana in December 1999 to continue discussions on a program for 2000 that could be supported by a second-year PRGF arrangement. However, the authorities were not fully prepared to discuss a program and needed more time to firm up the government budget for 2000. Follow-up discussions are expected to take place in April 2000.

The government is seeking a Public Service Reform Adjustment Operation from IDA. However, preparation of this proposed adjustment operation, especially agreeing on the content and timing of measures, is taking more time than initially anticipated. The government is currently preparing an Interim PRSP based on the National Development Strategy. Bank staff are assisting the government with the 1999 poverty data analysis, public expenditure review on social sectors, and labor market analysis. The government expects to complete the interim PRSP in May 2000. Reflecting the delays described earlier, the presentation of the second decision point document for Guyana is now expected no earlier than the third quarter of 2000.


A joint Bank/Fund mission visited Mali last October to review the progress made in meeting the completion point measures under the original HIPC framework. The mission concluded that the country had not implemented the completion point measures, especially those pertaining to the structural sectors as well as the social sectors. As a result, the first review of the IMF program has not been completed. The joint Bank/Fund mission agreed with the government on a set of measures that need to be implemented in order to reach the completion point. To date, progress in fulfilling these measures has been slower than expected. The implementation process has also been influenced by the change in government in February 2000. A Bank/Fund mission is now planned for April 2000 to assess progress of Mali in reaching the conditions for the completion point. As in Burkina Faso, it is expected that the second decision point document will be merged with the completion point under the original HIPC Initiative framework.


Over the last couple of months, staffs have worked closely with the outgoing government on the debt sustainability analysis and the interim PRSP. As a result of this work, the staffs were ready to present the debt relief package for discussion by the Boards. In March, presidential elections were held and resulted in a change of government. The new government will take office in early April. The staffs propose to hold discussions with the new government as soon as possible with a view to finalize economic and social policy agreements, including the timetable for preparing the PRSP. In light of these discussions, the staffs plan to submit the HIPC decision point document and the interim PRSP to the Boards as soon possible.

1IDA/SecM99-679, December 8, 1999, and EBS/99/220, December 7, 1999 entitled "Heavily Indebted Poor Countries (HIPC) Initiative: Update on Costing the Enhanced HIPC Initiative".
2December 22, 1999.

Possible Time Line of HIPC Initiative Country Documents, Q4 1999 to Q4 20001
    Q4        Q1          Q2    Q3    Q4

Countries eligible for reassessment2            
Bolivia     2nd D.P.   2nd C.P.  
Mozambique       2nd D.P.    
Uganda     2nd D.P. 2nd C.P.    
Benin       2nd D.P.    
Burkina Faso       original C.P. & 2nd D.P.    
Cote d'Ivoire           2nd D.P.
Guyana         2nd D.P.  
Mali         original C.P. & 2nd D.P.  
Senegal       2nd D.P.    
Possible new country documents
   under the enhanced Initiative
Cameroon       Prel. D.P.  
Chad       Prel.   D.P.
Ghana* DSA          
Guinea Prel.     D.P.    
Guinea-Bissau         D.P.  
Honduras Prel.     D.P.    
Malawi       Prel.   D.P.
Mauritania     D.P.      
Nicaragua           D.P.
Niger         Prel.  
Rwanda         Prel. D.P.
Tanzania     D.P.      
Yemen**       DSA    
Zambia       Prel.   D.P.

1Earliest possible timing is shown. Actual timing is subject to country circumstances.
2The timing of the second completion points for these countries will need to be decided by the Boards.
*The authorities have decided not to pursue HIPC Initiative assistance.
**Yemen appears to be sustainable according to the preliminary results of the DSA undertaken in November 1999.
DSA = debt sustainability analysis
D.P. = decision point
C.P. = completion point
Prel. = preliminary HIPC Initiative document