This report provides an update on the status of implementation of the HIPC Initiative and the MDRI over the past year. Given that most HIPCs have reached the completion point, in November 2011, the IMF and IDA Boards2 endorsed staff’s proposal to further streamline reporting of progress under the HIPC Initiative and MDRI. It was agreed that the annual HIPC Initiative/MDRI status of implementation report will be discontinued, while the core information—on debt service and poverty reducing expenditure, the cost of debt relief, creditor participation rates, and litigation against HIPCs—should continue to be made available and updated regularly on the IMF and World Bank websites.

This report reviews developments in the implementation of the Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI). It also provides updates on debt service and poverty-reducing expenditure by beneficiary countries, as well as on the cost of debt relief, creditor participation rates, and litigation against HIPCs.

The debt problems of poor countries are receiving unprecedented attention. Both federal and non-governmental organizations alike have been campaigning for debt forgiveness for poor countries. The governments of creditor nations responded to that challenge at a meeting sponsored by the G-7, International Monetary Fund, and World Bank, all of which upgraded debt relief as a policy priority. Their initiatives provided for generous interpretations of these nations' abilities to sustain debt, gave them opportunities to qualify for debt relief more rapidly, and linked debt relief to broader policies of poverty reduction. Despite this, the crisis has only deepened in the first years of the new millennium. This brilliant group of contributions assesses why this has occurred. In plain language, it considers why debt relief has been so long in coming for poor countries. It evaluates the cost of a persistent overhang in debt for those countries. It also examines, head on, whether enhanced debt relief initiatives offer a permanent exit from over-indebtedness, or are merely a short-term respite. Above all, this volume for the first time addresses the issues on the ground: that is, the views and opinions about debt relief on the part of leaders in advanced nations, and the probability of further support for the most impoverished lands. In this approach, the editors and contributors have made an explicit and successful attempt to be inclusive and relevant at all stages of the analysis. This volume covers the full range of the poorest countries, with contributions by John Serieux, Lykke Anderson and Osvaldo Nina, Befekadu Degefe, Ligia Maria Castro-Monge, and Peter B. Mijumbi. Collectively, they offer a sobering scenario: unless measures are put in place now, in anticipation of further crises, the future of the very poorest nations will remain bleak and troublesome.

This document updates the information provided in the September 2005 Heavily Indebted Poor Countries (HIPC) Initiative – Status of Implementation report. It deals exclusively with the enhanced HIPC Initiative, and does not consider the implications of the Multilateral Debt Relief Initiative (MDRI).

This report reviews progress and issues in implementing the enhanced Heavily Indebted Poor Countries (HIPC) Initiative and reports on the implementation of the Multilateral Debt Relief Initiative (MDRI) by IDA, the IMF, and AfDF. It concludes that the volume of debt relief has increased significantly since the inception of the HIPC Initiative in 1996, thereby reducing HIPCs’ debt service burdens and allowing them to finance increased poverty reduction efforts. It also provides updated information on the costs of debt relief under the HIPC Initiative and the MDRI. Finally, it reviews the status of creditor participation and delivery of debt relief under the two initiatives, highlighting the challenges to increase the participation by non–Paris Club official bilateral and commercial creditors in the HIPC Initiative.

This report reviews developments in the implementation of the Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI). It also provides updates on debt service and poverty-reducing expenditure by beneficiary countries, as well as on the cost of debt relief, creditor participation rates, and litigation against HIPCs.

In 1996, the IMF and the World Bank introduced the Heavily Indebted Poor Countries Initiative—a comprehensive debt relief program aimed at reducing the external debt burden of eligible countries to sustainable levels, provided they carry out strong programs of macroeconomic adjustment and structural reforms designed to promote growth and reduce poverty. Now that the HIPC Initiative is nearly completed, this paper investigates whether the initiative managed to spur growth, either directly or indirectly through investment. In contrast to earlier studies, we conclude that there is some evidence of positive effects of the HIPC Initiative on growth. Such evidence suggests that the HIPC Initiative and MDRI have helped HIPC-eligible countries to reach higher growth, but it remains unclear whether this is through higher investment or another channel. Also, the analysis illustrates that it is hard to disentangle pure debt-relief effects from other concurrent factors.