OREANDA-NEWS. The Boards of the African Development Bank Group (AfDB) on Wednesday, July 1, 2015 approved debt relief for the Republic of Chad under the Enhanced Heavily Indebted Poor Country (HIPC) initiative in the amount of US $37 million (at end 2000 Net Present Value terms, or approximately US $66.04 million, in nominal terms). This follows a joint assessment of the country in April 2015 by the IMF and World Bank as having attained the HIPC ‘Completion Point’.

In reaching the Completion Point, Chad also fulfilled the requirements to benefit from additional debt relief under the Multilateral Debt Relief Initiative (MDRI) from the African Development Fund, the International Development Association (IDA) and the European Union. Consequently, Chad is qualified for a debt cancellation of US $745 million in the form of debt service over 39 years from these creditors.

The Boards of the AfDB Group thus also approved MDRI debt cancellation assistance of US $160.09 million, which corresponds to the debt stock owed by Chad to the ADF at the end 2004 – and the amount that remained payable at the date of the country’s Completion Point (end April 2015).

The full implementation of the HIPC initiative will have a positive impact on Chad’s debt sustainability and improve its economic outlook. With better prospects for the country’s public debt, the budgetary resources freed up from the savings on debt service payments could be used to finance development and poverty reduction programmes as well as in key priority sectors, notably in education; health, including HIV/AIDS control; basic infrastructure; and rural development.

Since the AfDB Group began its cooperation with Chad in 1976, it has financed 90 operations (excluding multinational projects) in agriculture, transport, multi-sector, social, water and sanitation and communication and mining. Of the 90 operations, 63 have been completed, 12 were partly cancelled and 15 are ongoing.

The HIPC Initiative was launched by the World Bank and IMF in 1996 to create a framework in which all creditors, including multilateral creditors, can provide debt relief to the world's poorest and most heavily indebted countries, and thereby reduce the constraints on economic growth and poverty reduction imposed by the debt-service burdens in these countries. The Initiative was modified in 1999 to provide key enhancements. Under the MDRI, three multilateral institutions – the World Bank’s IDA, the IMF, and the African Development Fund – provide 100 percent debt relief on eligible debts to countries having reached the HIPC completion point. To date, 30 HIPC countries have reached their completion points.

As at end June 2015, 30 RMCs (out of 33) eligible for HIPC/MDRI debt relief assistance reaching the completion point, and therefore qualifying for irrevocable debt relief. Chad was the last HIPC beneficiary country to reach the completion point.