Senegal Receives 800 Million Dollars In Debt ReliefSenegal Receives 800 Million Dollars In Debt Relief
June 24, 2000
Jerome Hule
PANA Correspondent
NEW YORK, US (PANA) - Senegal is to receive debt relief of 800 million dollars under the enhanced heavily indebted poor countries (HIPC) debt relief initiative, the World Bank has said.
The bank said in a statement Friday that its soft loan arm, the International Development Association and the International Monetary Fund are supporting the debt relief from Senegal's creditors.
Under the package, IDA is to provide 149 million dollars in debt relief to cover 50 percent of Senegal's debt service obligations to the IDA every year for the next nine years.
The IMF will provide 51 million dollars in debt relief to be delivered over the next seven years. The IMF's relief covers 20 percent of Senegal's debt service obligations to the fund, the World Bank explained.
But to reach the final "completion point" when the debt relief becomes effective, Senegal is expected to take a number of measures aimed at strengthening and broadening its economic growth and reducing poverty.
The measures include completion of a poverty reduction paper, maintenance of a stable macro-economic environment, implementation of poverty reduction actions such as increase in budget for primary education and health as well improvement in poverty database and monitoring capacity.
Senegalese authorities project they would reach completion point by the end of 2001.
Senegal was earlier denied debt relief under the original HIPC framework because creditors then considered that other sources of debt relief under bilateral arrangements were sufficient for the country to attain a sustainable debt position.
HIPC was conceived in 1996 to grant debt relief to countries that were adjudged to have unsustainable debt levels.
Following criticism of the original HIPC framework, policy makers announced last September at the annual meeting of the World Bank and the IMF, enhancements to the original HIPC.
The enhancements lowered the qualifying thresholds in respect of the ratios of a country's debts to its exports and revenue.
About 36 countries, 29 of them from Sub-Saharan Africa, are expected to qualify for assistance under the enhanced HIPC.
"Senegal's eligibility for debt relief under the enhanced HIPC initiative is a recognition by the international community of the progress made in implementing economic reforms and developing poverty reduction strategy," the bank noted in its statement.
The assistance provided under the debt relief is expected to further help the country advance its poverty reduction programmes, it said.
Over the past four years, Senegal has maintained an annual growth rate of more than five percent and kept its inflation rate at less than three percent. The country has also recorded fiscal surpluses of more than 1.5 percent since 1995.
Besides Senegal, Bolivia, Mozambique, Mauritania, Tanzania and Uganda have reached the decision point under the enhanced HIPC.
The "decision point" is the first step in the debt relief process at which a country is determined to have shown capacity to prudently use debt relief assistance.
The World Bank has put the total debt assistance so far provided to the six qualifying countries at 13 billion dollars.
Three others - Burkina Faso, Cote d'Ivoire and Mali - have reached their decision points under the original HIPC framework while Guyana has already reached the completion point.
All four countries received debt relief commitments amounting to 1.6 billion dollars and are to be considered for more relief under the enhanced HIPC terms, the bank said.
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