Government qualifies for debt relief under HIPC initiative

The World Bank and the IMF this week announced that Ethiopia had qualified for debt relief amounting to US $1.9 billion under the Heavily Indebted Poor Countries (HIPC) initiative. In a joint statement on Monday, the two organisations said Ethiopia had taken the necessary steps to qualify for HIPC status. The statement noted that Ethiopia's performance under the IMF-supported Poverty Reduction and Growth Facility (PRGF) programme had so far been "good", with a 7.1 percent GDP growth in 2000/1, and negative inflation. The total debt relief from all Ethiopia's creditors would amount to approximately $1.9 billion. An Ethiopian foreign ministry official in Addis Ababa told IRIN he welcomed the announcement, adding that the debt relief would greatly contribute to the country's economic development. "It is the government's concerted view that the resources will be channeled to development activities to benefit the poor segments of this country," he said. The news will come as welcome relief to a country whose average per capita earnings rank second-lowest in the world, standing at just $100 per annum. The savings from debt servicing as a result of Ethiopia's HIPC qualification should run close to $100 million a year for the next 20 years, providing much-needed succour to one of the world's poorest countries.