Kinshasa gets $10 billion debt cut

The Democratic Republic of Congo's total external debt is due to be reduced by about 80 percent under the International Monetary Fund (IMF) and the World Bank's Heavily Indebted Poor Countries (HIPC) Initiative, the IMF reported on Monday. "Debt relief under the enhanced HIPC Initiative from all of the DRC's creditors will amount to approximately US $10 billion in nominal terms (or US $6.3 billion in net present value terms) over time," the institution reported from its headquarters in Washington D.C. The move follows a declaration by the IMF and the World Bank's International Development Association (IDA) that the Congo had taken the steps necessary "to reach its decision point" under the HIPC Initiative. The IMF reported that the Congo became the 27th country to reach its decision point under the enhanced framework of the HIPC Initiative. Under the initiative, the IDA is scheduled to provide $1.03 billion in nominal debt service relief, which translates to about $831 million in net present value terms, to be delivered through a 90-percent reduction in debt service on IDA credits from 2003 to 2006. The IMF said it would provide aid of about $472 million in net present value terms, to be delivered through an average annual reduction in debt service of about 50 percent until 2012. Both institutions have already delivered some of their aid through the concessional treatment of arrears owed to them, and IDA has delivered an additional portion of its aid through a post-conflict grant. Following a discussion on 23 July by the IMF's executive board, Managing Director Horst Kohler said Congo's implementation of its economic programme to date, "under difficult circumstances, has been broadly satisfactory and has paved the way for reaching the decision point under the enhanced HIPC Initiative". The World Bank Country Director for the Congo, Emmanuel Mbi, said that the bank's executive directors had also warned of the high risks the Congo faced in making economic progress and called for "determined action" by its authorities and concerted support from the international community to ensure that the economic recovery "attains a stronger foothold and the economy begins to realise it enormous potential". Other countries in the Great Lakes region that have reached their decision points under the HIPC initiative are Rwanda and Tanzania. [For more details, go to: www.imf.org]