The International Monetary Fund (IMF) and the World Bank's International Development Association (IDA) on Tuesday approved $3.1 billion in debt relief for Ivory Coast.
The measure, under the Heavily Indebted Poor Countries (HIPC) Initiative, represents a 24 percent reduction of its external debt, plus a further $1.3 billion of debt relief under the Multilateral Debt Relief Initiative (MDRI).
A World Bank press release said the Boards of Directors of both institutions determined that country had made satisfactory progress in meeting the requirements to reach the completion point under the HIPC Initiative, the stage at which debt relief becomes irrevocable and at which countries start to benefit from additional multilateral relief.
The requirements met by Ivory Coast included satisfactory implementation of the Poverty Reduction Strategy Paper (PRSP), maintenance of a sound macro-economic policy framework, regular publication of information on public finances, and reform of the governance of the cocoa sector, among others.
Ivory Coast was granted waivers for delays/interruptions of five completion point triggers related to publication of information on public finances, as satisfactory progress has been made before and after the post-elections crisis.
"Reaching the HIPC completion point represents a milestone for Ivory Coast and its population. It reflects the significant progress achieved in economic management since the Ouagadougou peace accord of 2007 and the end of the post-election crisis in April 2011," said Doris Ross, IMF mission chief for Ivory Coast.
"Reaching the completion point will also help Ivory Coast normalize relations with its external creditors, according to her. Although this will increase debt service payable in the medium term, it will also help catalyze further support from donors and potential investors. Doris reminded that "judicious macro-economic management will remain critical to make the West African country's enormous growth potential a reality and bring prosperity to its people, while maintaining debt sustainability."
Madani M. Tall, World Bank Director for Ivory Coast, said the debtors "will continue to work with the country to ensure the economy remains stable and resilient in the face of potential economic shocks."
Of the resulting reduction of $3.1 billion in the stock of debt under the HIPC Initiative, 23 percent comes from multilateral creditors, 43 percent from Paris Club bilateral creditors, and the remainder from other bilateral and commercial creditors. The World Bank's fund for the poorest countries will provide a further $1.1 billion with the cancellation of almost all remaining IDA credits after HIPC relief, and the African Development Bank (AfDB) will provide debt relief of $156.2 million, canceling almost all of the country's repayment obligations to the AfDB.
Full delivery of debt relief at the completion point will considerably reduce the debt burden of Ivory Coast. Nevertheless, both the IMF and the World Bank consider that the country remains vulnerable to potential economic shocks, underlining the need for continued strong economic management and structural reforms.
Ivory Coast becomes the 33rd country to reach the completion point under the HIPC Initiative. The completion point marks the end of the HIPC process, which started in 2009.
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