IMF/World Bank gives additional debt relief

The International Monetary Fund (IMF) and the World Bank have given Mozambique additional debt relief under the enhanced Heavily Indebted Poor Country Initiative (HIPC), making it eligible for an extra US $600 million. "As a result of the HIPC assistance and bilateral debt relief already committed, Mozambique's external debt is reduced by some 73 percent, and possible additional bilateral relief could raise this figure," a statement from the two organisations said this week. Mozambique becomes the third country after Bolivia and Uganda to have reached this point. Including assistance under the original HIPC agreement, total debt relief to Mozambique has reached more than US $3.5 billion. Mozambique's debt service payments are expected to come down from about US $100 million in 1998 to about US $56 million between next year and 2010. "Debt service payments are cut almost in half ... creating room for additional public expenditures on poverty reduction ... Resources made available by debt relief provided under the HIPC initiative will be allocated to anti-poverty programmes, which are outlined in Mozambique's Poverty Reduction Strategy Paper," the statement said. The IMF and World Bank mentioned the approval of Mozambique's poverty reduction strategy paper, the stable economic performance and social and administrative reforms as factors which allowed it to qualify for the additional relief.