US $3.7 billion HIPC debt-reduction package approved

The International Monetary Fund and the World Bank have agreed to support a US $3.7 billion debt reduction package for Ghana, under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative, the World Bank announced on Tuesday.

Both institutions, the bank said, agreed to begin providing debt relief immediately along with most official bilateral creditors. The bulk of additional assistance under the enhanced HIPC Initiative will be delivered when Ghana completes a number of agreed measures.

"The Government of Ghana is developing a detailed plan for the use of funds made available through debt relief under the enhanced HIPC Initiative, guided by the Ghana Poverty Reduction Strategy, when finalised in the first half of 2002," the bank said. "The HIPC relief will be directed primarily at increased expenditures on education, health, programmes to improve services and infrastructure in the rural sector, and improved governance. A portion of the relief will be used to reduce domestic public debt."

The full paper analysing the basis on which Ghana has qualified for the Decision Point under the enhanced HIPC Initiative can be read at http://www.imf.org.

According to the bank, 36 countries are expected to qualify for assistance under the enhanced HIPC Initiative. Most are in sub-Saharan Africa. Apart from Ghana, other West Africa qualifiers include Benin, Burkina Faso, Cameroon, Chad, The Gambia, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, São Tome and Príncipe, and Senegal. Nearly US $40 billion has been committed for the initiative.