1. The Multilateral Debt Relief Initiative
Status of Implementation
Multilateral Development Bank Meeting on Debt Issues
Washington, DC—June 21-22, 2006

2. Overview Origins and purpose of the initiative
Financing of the MDRI in the Fund
Eligible countries
Eligible debt
Implementation to date

3. Origins and Purpose of the Initiative
Launched by the G8 in June 2005, confirmed at Gleneagles
Purpose: free up additional resources to help poor indebted countries advance faster towards the MDGs
Three IFIs (IMF, IDA, AfDF) to forgive 100 percent of their claims on 35 HIPCs
Modalities may vary across IFIs
In particular: different financing sources
IMF: own resources
IDA, AfDF to receive compensation from donors

4. Financing the MDRI in the Fund
Two sources of resources available for debt relief from the Fund
Remaining proceeds from the off-market gold sales
Bilateral contributions received to subsidize lending under the PRGF

5. Financing the MDRI in the Fund
Gold sales proceeds
Must be used uniformly across the membership
Debt relief to all members below a certain income cutoff
Income cutoff set at $380 per capita
23 HIPCs and 2 non HIPCs

6. Financing the MDRI in the Fund
Bilateral contributions to the PRGF account
Not subject to uniformity of treatment requirement
But require consent from each contributor
Debt relief to HIPCs above the $380 cutoff

7. Financing the MDRI in the Fund
Two Trust Funds set up
MDRI-I: SDR 1.5 bn from gold sale proceeds
MDRI-II: SDR 1.12 bn from PRGF Subsidy account
Donors commit to provide additional funds
Debt relief for protracted arrears cases (Liberia, Somalia, and Sudan)
Debt relief for sunset clause HIPCs (Eritrea, Haiti, Kyrgyz Republic, and Nepal)
Subsidies for future PRGF, ESF loans

8. Country coverage in the Fund
Countries eligible under the “MDRI-I Trust” (per-capita income below US$380)
Countries eligible under the “MDRI-II Trust” (per-capita income above US$380)
Countries eligible as of June 1, 2006
Countries (19) that have reached the completion point under the Enhanced HIPC Initiative
Burkina Faso, Ethiopia, Ghana, Madagascar, Mali, Mozambique, Niger, Rwanda, Tanzania, Uganda
Benin, Bolivia, Cameroon, Guyana, Honduras, Mauritania, Nicaragua, Senegal, Zambia.
Non-HIPC countries (2) with per capita income below US$380 and outstanding debt to the IMF
Cambodia, Tajikistan.
Countries eligible once they reach the completion point under the Enhanced HIPC Initiative
Countries (10) that have reached the decision point under the Enhanced HIPC Initiative
Burundi, Chad, Democratic Republic of the Congo, Republic of Congo, The Gambia, Guinea-Bissau, Malawi, São Tomé and Príncipe, Sierra Leone.
Guinea.
Countries (11) potentially eligible for HIPC assistance on the basis of their indebtness level as of end 2004
Central African Republic, Eritrea, Liberia, Nepal, Togo
Comoros, Cote d’Ivoire, Haiti, Kyrgyz Republic, Sudan
Somalia (data on per-capita income not available)

9. Eligible debt Cutoff date: end 2004
No provision for reimbursement of payments made between January 1, 2005 and qualification
Delivery through stock-of-debt cancellation
Total estimated cost: SDR 5.3 bn (US$ 8 bn) in 2005 NPV terms

10. Qualification Post-completion-point HIPCs must qualify for MDRI relief
Other HIPCs qualify automatically upon reaching their HIPC completion point
No additional conditionality after HIPC
No “material change” since completion point
Continued satisfactory performance in three areas: macroeconomic management, poverty reduction policies, public expenditure management

11. Qualification assessments
Undertaken in close collaboration with the World Bank
17 of the 18 post-completion-point countries qualified for MDRI relief from the Fund
Mauritania to implement remedial actions
2 non HIPCs also qualified for MDRI relief from the Fund

12. Implementation Modalities approved November 21, 2005
Qualification of 19 countries December 21, 2005
Consents received from contributors January 5, 2006
Relief delivered to 19 countries January 6, 2006
Relief delivered to Cameroon upon completion point April 28, 2006
Mauritania could qualify today

13. MDRI relief delivered to date
Relief delivered to 20 countries: 18 HIPCs and 2 non HIPCs
SDR 2.5 bn (US$ 3.6 bn)
Including SDR 330 mn (US$ 475 mn) in remaining HIPC assistance
Countries expected to receive MDRI relief in the near future: Mauritania, Malawi, Sao Tome and Principe, Sierra Leone