The Multilateral Debt Relief Initiative

At the Finance Ministers’ Meeting in London on 10-11 June 2005, the G8 agreed a ground-breaking deal under which Heavily Indebted Poor Countries (HIPCs) will receive 100% debt stock cancellation on debts owed to the World Bank, IMF and African Development Bank (AfDB). The deal will be worth up to $50billion for 41 countries

Despite the successes of the HIPC Initiative, further debt relief is still needed to allow countries to make the investments in health, education and infrastructure that would allow them to attain the Millennium Development Goals. Many bilateral donors, including the UK, go beyond HIPC and provide 100% relief, but multilateral institutions currently provide relief at around half this level. This is why the G8 has agreed that HIPCs will receive 100% debt stock cancellation on their multilateral debts.

Under this deal, the G8 has agreed that they will provide additional resources to finance the cancellation of the debt stock owed by HIPCs to the World Bank and AfDB. In addition to the countries receiving this debt relief, all other countries receiving concessional funds from the World Bank and African Development Bank will also benefit from the additional resources to be channelled through the World Bank and AfDB. The cost of debt stock cancellation by the IMF will be met by the use of existing IMF resources

Estimated Financial Impacts of the G8's Multilateral Debt Relief Initiative (MDRI).

Following the proposal of the new MDRI by the G8, the international community agreed a new deal under which Heavily Indebted Poor Countries (HIPCs) would receive full debt cancellation of their remaining debts to IDA, the AfDF and the IMF. The MDRI will provide approximately $13.1 billion in additional resources for poor countries until 2015. Between 2006 and 2050 it will have provided in excess of $50 billion. IMF debt relief has already begun, the debts of 23 countries have been cancelled, with debt stocks amounting to $3.3billion. These countries will not make any further payments to the IMF relating to these obligations

 Last updated: 02 January 2008