Sections:
2. Debt Relief
What we agreed at Gleneagles
- The G8 will continue to press for the full financing and implementation of the
Heavily Indebted Poor Countries Initiative (HIPC).
- The G8 will support the cancellation of 100% of the outstanding debts of Heavily Indebted Poor Countries (HIPC) to the
- The G8 will work with the
How is the UK doing?
The
UK continues to exceed its commitment under HIPC,
giving 100% debt cancellation for
HIPCs on bilateral debts to the UK. We continue to support the full
implementation and financing of the HIPC Initiative - helping multilateral
institutions meet the costs of their debt relief and supporting more countries
to receive debt relief as quickly as possible. We helped clear the arrears of
the Central African Republic to the
African
Development Bank in 2006, enabling it to apply for debt relief. We've also
promised to help fund arrears clearance for Liberia in the African Development
Bank (AfDB) and to play our part in a G8 contribution towards arrears clearance
at the International Monetary Fund.
We have worked hard with the international community to ensure that the
Multilateral Debt Relief Initiative
(cancelling 100% of poor countries’ debts to the IMF, IDA and AfDF) has been
implemented. We have participated in the Paris Club debt deal that eliminated
Nigeria’s bilateral debts.
How the international community is doing
The Multilateral Debt Relief Initiative (MDRI) was implemented in 2006 and 22 countries (including 18 in Africa) have now had all debts to the World Bank (IDA), International Monetary Fund (IMF) and African Development Fund (AfDF) cancelled. This amounts to over $38 billion.
Up to 17 other countries will receive similar debt cancellation when they reach the required standards. MDRI savings will release about $1 billion a year that will be spent on reducing poverty in developing countries in 2007. This will rise to $1.7 billion by 2010. The HIPC framework has been made more flexible so that post-conflict countries can now qualify for debt relief more quickly. Rwanda and Sierra Leone have already received irrevocable debt cancellation, while Burundi, Republic of Congo and Democratic Republic of Congo are receiving interim debt relief under HIPC.
Nigeria's debt relief package was completed in April 2006. This was the largest such deal ever in sub-Saharan Africa, extinguishing around $30 billion of the country’s debts.
What should happen next?
The UK wants the G8 to ensure that donors meet the commitments they made to cover the full costs of debt relief.
Where it is making a difference
- Ghana used its $57.9 million from the MDRI in 2006 on health, water, energy and other infrastructure, as well as to improve major highways and feeder roads in rural areas.
- Honduras used MDRI debt relief of $27.6 million in 2006 to eliminate fees for public schools.
- Zambia is using its debt relief savings to abolish health user fees for people living in rural areas – thousands of poor people now have access to free healthcare.
Last updated 12 March 2008