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This report reviews progress and issues in implementing the enhanced HIPC Initiative. In addition to updating information on the delivery of HIPC debt relief and its estimated costs, it discusses two particular issues: the decline in the participation of commercial and non-Paris Club bilateral creditors to the Initiative; and the preliminary list of countries that satisfy the indebtedness eligibility criterion under the extended HIPC sunset clause.

This report provides an update on the status of implementation, impact and costs of the enhanced Heavily Indebted Poor Country (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI) since mid-2006. It also discusses the status of creditor participation in both initiatives and the issue of litigation of commercial creditors against HIPCs.

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 aims to accomplish three objectives: (a) it provides an update on the status of implementation, impact, and costs of the Heavily Indebted Poor Country (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI); (b) it proposes a modification of the reporting of progress under the initiatives, including the discontinuation of the annual status of implementation reports, and the preparation of periodic reports on debt vulnerabilities in low income countries (LICs), including HIPCs; and (c) it proposes a further ring-fencing of the list of countries eligible or potentially eligible for debt relief under the HIPC Initiative based on end-2010 income and indebtedness criteria.

This report provides an update on the status of implementation, impact and costs of the enhanced Heavily Indebted Poor Country (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI) since mid-2006. It also discusses the status of creditor participation in both initiatives and the issue of litigation of commercial creditors against HIPCs.

In 1996 the World Bank and the International Monetary Fund, in response to a call from the leaders of the major industrial nations for a comprehensive approach to the debt problems of the poorest countries, proposed the Heavily Indebted Poor Countries (HIPC) Debt Initiative. The initiative reflects concerns of creditors, including the U.S., that, even after receiving debt relief through existing mechanisms, some poor countries will have debt burdens that remain too large relative to their ability to pay. This report: (1) describes the implementation of the HIPC initiative and (2) assesses the initiative's potential to achieve its stated goal. Charts and tables.