World Bank announces US $1.5 billion in debt relief

The World Bank announced on Thursday that Burundi's government had met the economic reforms for international creditors to write off what would have amounted to US $1.5 billion in debt servicing.

"Burundi has made good progress in strengthening macroeconomic policy performance and deepening the structural reform agenda," said Agustin Carstens, acting chair of the International Monetary Fund (IMF) Executive Board.

In light of these reforms, the IMF and the World Bank said Burundi was now the 28th country to reach "a decision point" under their enhanced debt relief programme known as the Heavily Indebted Poor Countries Initiative, or HIPC.

Most of the relief will be for debts Burundi owes to the World Bank's no-interest lending arm, the International Development Association. The bank said the relief will allow a 90-percent reduction in debt service payments of the hundreds of millions of dollars that Burundi would have had to make from now until 2039.

The IMF will also allow Burundi to reduce its average service payments for debts by about 50 percent through 2015.

"Under the enhanced HIPC Initiative's burden sharing approach, Burundi's other creditors will provide the remainder of the Initiative's debt relief," the World Bank said.

However Carstens warned: "Burundi's external debt situation will remain difficult even after HIPC debt relief, and strong economic policies, prudent debt management, and continued donor support on highly concessional terms will be needed to ensure a sustainable external debt in the medium term."