The HIPC (Heavily Indebted Poor Countries) initiative in Uganda

Résumé du document

In August 2005, the G8 decided to cancel the multilateral debt of 18 countries which are part of the Heavily Indebted Poor Countries (HIPC) Initiative, in Uganda. This Initiative was launched by the International Monetary Fund (IMF) and the World Bank (WB) in 1996 in order to reduce the debt burden of numerous Third World countries. In 2000, it was enhanced (HIPC II) to make debt relief broader, deeper and faster. The Initiative has three aims: make the countries' debt "sustainable", bring long-term economic growth, and reduce poverty. Under the pressure of Non-Governmental Organizations (NGOs), this last point was underlined in the design of HIPC II: from then on, every applicant country has to prepare a Poverty Reduction Strategy Paper (PRSP).

Extraits

[...] The HIPC (Heavily Inedebted Poor Countries) initiative in Uganda In August 2005, the G8 decided to cancel the multilateral debt of 18 countries which are part of the Heavily Indebted Poor Countries (HIPC) Initiative, in which Uganda. This Initiative was launched by the International Monetary Fund (IMF) and the World Bank in 1996 in order to reduce the debt burden of numerous Thirld World countries. In 2000, it was enhanced (HIPC II) to make debt relief broader, deeper and faster. [...]

[...] To achieve this goal, the International Financial Institutions (IFIs) rely on two pillars: debt reduction and structural reforms. First of all, there is a consensus to say that an unsustainable debt impedes economic expansion. That is why the debt relieves granted under the Initiative are bound to boost the HIPCs' economies: they are expected to free up funds that the states can use to stimulate growth (poverty reduction, improvement of the network of roads, ) and to make investors more confident in these economies. [...]

[...] Moreover, the savings created by the debt relieves have speed up Uganda's program of poverty reducing. These new available grants seem to be used with efficiency thanks to the PEAP and the PAF. This triggered an observable improvement of the living standard, especially in rural areas that suffered the most from poverty. Nevertheless, this state of affairs has to be relativized. First of all, in spite of the regular debt relieves, Uganda is still considered as a heavily indebted country. [...]

[...] It has been created to secure the savings engendered by the debt relieves and to prove the government's commitment in using them for poverty reducing. This fund was particularly welcomed in regards to the widespread corruption in Uganda. Indeed, some NGOs control that the funds which are in the PAF are not embezzled and are really used to reduce poverty. Thus, the PEAP is often quoted as an example of how to deal with poverty reduction in the framework of the HIPC Initiative. [...]

[...] The multilateral debt reached US$ 4,5 billion in 2005[5], whereas the total debt amounted to 3,2 billion in June 1999. There are several reasons for it, in which two main. First, Uganda kept having new loans after its selection for HIPC II: it borrowed around US$ 1 billion between May 2000 and June 2003[6]. Even if it did it on highly concessional terms, this made its debt burden heavier. Secondly, the HIPC Initiative doesn't protect the different countries against fluctuation in global commodity prices. [...]