US $460 million in debt relief

Benin has taken steps necessary to reach its completion point under the enhanced Heavily Indebted Poor Countries (HIPC) initiative, making the country eligible for debt relief totalling US $460 million, the IMF and World Bank's International Development Association (IDA) reported on Tuesday. The completion point under HIPC is when creditors commit themselves irrevocably to debt relief, as opposed to the preceding state, decision point, when debt relief is begun on an interim basis. "IDA will provide debt relief under HIPC amounting to $124 million in debt service relief [US$84.4 million in net present value terms] through a 50-percent reduction in debt service on IDA credits from 2000 through 2014," a World Bank press statement said. "IMF will provide debt relief of $28.5 million, delivered through a 32 percent reduction in debt service until 2007." The remaining creditors, it added, were expected to provide their share of relief required under HIPC. "Benin’s HIPC completion point reflects the Government’s strong track record of reform," Antoinette Sayeh, World Bank country director for Benin said. "Resources made available under HIPC have been used to commendable effect in education, health, the fight against HIV/AIDS and rural water and sanitation." The statement said Benin's total external debt was to be reduced by about 31 percent in net present value terms while debt service payments would be cut by more than a third over the next decade. "This debt relief, together with the Government’s commitments to structural reforms and macroeconomic stability, provide Benin with a sound basis for future pro-poor growth in the country," Pierre Ewenczyk, the head of the IMF mission for Benin said. Benin becomes the eighth country to reach its completion point under the enhanced framework of the HIPC Initiative. Others are Bolivia, Burkina Faso, Mauritania, Mali, Mozambique, Tanzania and Uganda. The International Development Association, IDA, is the World Bank’s concessional lending window. It provides long-term loans at zero interest to the poorest of the developing countries. IDA lends to countries that lack the financial ability to borrow from IBRD. At present, 81countries are eligible to borrow from IDA. It lends, on average, about $6-7 billion a year for different types of development projects, especially those that address peoples' basic needs, such as primary education, basic health services, and clean water and sanitation.