Debt Relief
Mali qualifies for US$ 870 million HIPC debt relief

afrol.com, 13 September  - The World Bank Group's International Development Association (IDA) and the International Monetary Fund (IMF) agreed that Mali has made satisfactory progress in its economic and social programs to reach its completion point under the original Heavily Indebted Poor Countries Initiative framework (HIPC).

Thereby, Mali is eligible to begin receiving irrevocably US$ 220 million in debt service relief (US$ 128 million in net present value, or NPV terms). Mali was one of the original countries to qualify for assistance under the original HIPC framework when it reached its decision point in September 1998.

IDA and the IMF also agreed that based on its determined efforts in social and structural reform, the commitment to prepare a fully participatory Poverty Reduction Strategy Paper, and the continued implementation of IDA and IMF programs, Mali has qualified for additional assistance under the enhanced framework (adopted in September 1999) amounting to US$ 650 million in debt service relief over time (US$ 401 million in NPV terms). Together with the debt service reduction obtained under the original framework, total savings on IDA debt service is estimated at about US$ 283 million, while the IMF is providing additional savings of about US$ 58 million. 

Creditors are expected to proceed speedily with providing debt relief under the original framework. Regarding the enhanced assistance, IDA and the IMF will start providing interim debt relief under the enhanced framework. Mali will reach its completion point under the enhanced Initiative and receive the remainder of its debt relief from all creditors once it has made satisfactory progress to improve key policies notably in the education and health sectors, and has prepared a costed and prioritized Poverty Reduction Strategy Paper (PRSP) in consultation with a cross section of local civil society and with the support of international partners. 

Mali's completion point under the original HIPC Initiative and eligibility under the enhanced HIPC Initiative is a recognition by the international community of the progress made in implementing economic reforms and in the social sectors. The resources freed by the HIPC Initiative will help support the continuation and strengthening of this progress.

Social policies and macroeconomic reform 
Mali, with a GNP per capita of $250 in 1998, is among the ten least-developed countries in the world. Its social indicators are significantly weaker than the averages for sub-Saharan Africa. In this context, Mali has made determined efforts to address key social areas, such as setting and meeting targets for budgetary allocation for primary education and health care. These efforts have resulted in moderate improvements in important social indicators. Over the past ten years, for instance, gross primary enrollment has risen from about 32 percent in 1991/92 to about 56 percent in 1999/00. In the area of primary health, early progress has been achieved in developing community health centers and promoting public-private partnerships to develop and consolidate health reforms. The authorities continue to address some systemic problems, including over-concentration of resources in secondary and tertiary care and shortages of personnel and equipment in rural areas. 

With the establishment of a democratic government in 1992 and the resolution of the conflict in the northern part of the country, there have been substantial policy reforms aimed at achieving sustainable economic growth and poverty reduction. These policies have resulted in generally promising results over the past few years, though external factors such as unfavorable weather conditions and world oil price increases have caused fluctuations in economic performance. Real GDP growth, estimated at close to 7 percent in 1997, fell to 3½ percent in 1998, but rebounded to an estimated 5½ percent in 1999. Despite these difficulties, Mali has made determined efforts to implement important reforms in tax administration, budget management, privatization and public enterprise reform. These efforts have been complemented by ongoing strengthening in the area of private sector development and financial sector reforms.

The next steps
Before the dept relief is implemented, there still remain some reform steps to be taken. While the IDA and IMF, and possibly other creditors, will start delivering the interim HIPC assistance under the enhanced HIPC Initiative, the full assistance from Mali's creditors will be delivered when it has been determined that the following conditions have been met as part of overall progress in poverty reduction:

· As part of the PRSP, maintenance of a stable macroeconomic environment, with performance to be monitored under the IMF's Poverty Reduction and Growth Facility (PRGF) arrangement and IDA's lending program; 
· Satisfactory implementation of a set of agreed structural reforms, including continued implementation of reforms under the cotton sector restructuring plan; and pursuit of the privatization program, especially of public utilities and banks.
· Satisfactory implementation of reforms in the education sector, as defined in the government's ten-year education program, especially with respect to budget allocation and teacher recruitment; and in the health sector, with an emphasis on budget allocation and personnel policy.
· Preparation of a full PRSP through a participatory process, and satisfactory assessment by IMF and World Bank.

So far, 17 countries have qualified for assistance under the enhanced HIPC Initiative, for packages amounting to some $30 billion in debt service relief over time. Ten countries have now reached their decision point under the enhanced framework (Mali joins Benin, Bolivia, Burkina Faso, Honduras, Mauritania, Mozambique, Senegal, Tanzania and Uganda), with total committed assistance estimated at roughly $16 billion.

Source: World Bank

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