By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The International Monetary Fund (IMF) and the World Bank’s International Development Association (IDA) said on Wednesday they have approved $1.1 billion in total debt relief for Chad.
The IMF says $1.0 billion is expected to be delivered by multilateral creditors and the remainder by bilateral and commercial creditors.
The both global financial institutions affirmed that Chad has made satisfactory progress in meeting the requirements to reach the completion point under the Heavily Indebted Poor Countries (HIPC) Initiative, “the stage at which the HIPC debt relief becomes irrevocable and the country will benefit from the Multilateral Debt Relief Initiative (MDRI),” a statement from the IMF said.
According to the IMF, debt relief under Chad’s creditors was estimated at $170.1 million in end-2000 present value terms. “Debt relief from the IMF would total $18.0 million and from the World Bank’s IDA, $68.1 million,” the Fund added.
Chad after reaching the HIPC completion point also becomes eligible for further nominal debt service reduction from IDA ($509 million) and the African Development Fund ($236 million) under the MDRI.
“Reaching the HIPC completion point represents an important achievement and milestone for Chad. It reflects the significant improvement in economic management in recent years, including during the period covered by a staff monitored program (SMP) approved by Fund management in July 2013 and the ongoing three-year ECF-supported program approved by the Executive Board in August 2014,” said Mauricio Villafuerte, IMF mission chief for Chad.
Villafuerte noted the lifeline will also help Chad allocate more resources for poverty reduction and the promotion of economic growth. “Sound macroeconomic management will remain critical after the completion point for Chad to reap the full benefits of the debt relief,” Villafuerte added.
“The attainment of the HIPC completion point opens a new development era for Chad. It acknowledges the many efforts accomplished by Chad to exit from a difficult decade of conflict and instability, and allows refocusing attention and resources on Chad’s forward looking emergence agenda. In the next months, the World Bank will present its new Country Partnership Framework to support Chad’s aspirations over the period 2016-20, notably in terms of rural development, health, education, social protection, and governance” said Paul Noumba Um World Bank Country Director for Chad.
Full delivery of debt relief (HIPC Initiative, MDRI, and additional bilateral assistance at the completion point) will significantly reduce the debt burden of Chad. The present value of debt-to-exports ratio would fall from 55.1 percent at end-2013 to 31.3 percent at end-2015. It is projected to fall further to 12.5 percent at end-2019.
