Burkina Faso
Burkina Faso qualifies for US$ 700 million HIPC debt relief

afrol.com, 12 July  - The International Monetary Fund (IMF) and the World Bank Group's International Development Association (IDA) agreed that Burkina Faso has satisfied the requirements to reach its completion point under the original Heavily Indebted Poor Countries (HIPC) Initiative, and is thereby eligible to begin receiving around US$ 400 million in debt service relief, or US$ 229 million in net present value (NPV) terms. Burkina Faso was one of the initial countries to qualify for assistance under the original HIPC framework when it reached its decision point in September, 1997. 

The IMF and IDA also agreed that based on its determined efforts in social and structural reform, the policy commitment presented in the Poverty Reduction Strategy Paper, and the implementation of IMF and IDA programs, Burkina Faso has qualified for additional assistance under the enhanced framework (adopted in September 1999) amounting to US$ 300 million in debt service relief over time (US$ 169 million NPV). Together with the debt service reduction obtained under the original framework, total savings on IDA debt service is estimated at about US$ 282 million, with the IMF providing an additional US$ 49 million. The combined debt service savings from all Burkina Faso's creditors under the HIPC Initiative of US$ 700 million effectively cuts in half Burkina Faso's debt service obligations over the coming years.

All creditors are expected to proceed speedily with providing debt relief under the original framework. Regarding the enhanced assistance, the IMF and IDA will start providing interim debt relief under the enhanced framework. Burkina Faso will reach its completion point under the enhanced Initiative and receive the remainder of its debt relief from all creditors once it has it fulfilled a number of steps designed to improve key policies in the education and health sectors. Country authorities have outlined many of these measures in a Poverty Reduction Strategy Paper (PRSP), drafted in consultation with a broad cross section of local civil society and with the support of international partners. 

Burkina Faso'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.

Burkina Faso remains one of the poorest countries in the world, ranking 172nd out of 174 countries in the United Nations Development Program's 1988 human development index. In this context, Burkina Faso has made determined efforts to address key social areas, such as primary education and basic health care. Over the past ten years, for instance, the share of the education budget allocated to basic education increased from 45 percent to about 58 percent. This budgetary reprioritization has been complemented by the construction of additional school facilities, with an average of 800 additional classrooms added each of the past several years. Progress in improving health indicators in Burkina Faso has been equally difficult, though substantial steps forward have been made in building more health centers, training more health personnel and increasing the availability of essential generic drugs. 

Burkina Faso has also devoted attention to implementing crucial economic reforms, with tangible results. Despite a deterioration in the terms of trade, real GDP between 1996 and 1999 grew on average by 5.6 percent annually, owing mainly to the 1994 CFA franc devaluation, a large public investment program, and financial and structural policies aimed at maintaining macroeconomic stability. Inflation has dropped in recent years to 2 percent, and public finances have improved markedly, with government revenue increasing to 15 percent of GDP in 1999. Translating improving economic performance into broad poverty reduction is the primary aim of IMF and IDA program support. 

Sources: IMF & World Bank

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