[stop-imf] Mauritania gets HIPC relief (but not relief from HIPC)

[Robert Weissman]

Press Release No. 00/9 
 February 10, 2000

International Monetary Fund

700 19th Street, NW

Washington, D.C. 20431 USA



  Mauritania Qualifies for US$1.1 Billion Debt Relief Under HIPC to
Support Poverty
                                            Reduction

The International Monetary Fund (IMF) and the World Bank's International
Development Association (IDA) have agreed to
support Mauritania's eligibility for a debt reduction package under the
enhanced Heavily Indebted Poor Countries (HIPC)
initiative. To address fully Mauritania's external debt burden, the fiscal
criterion-the ratio of debt to government revenues-is
being used to calculate the reduction of the debt in net present value
terms. Resources made available from this debt relief
will help finance social expenditures, contributing to Mauritania's
efforts to reduce poverty.

In net present value terms, total relief from all of Mauritania's
creditors would amount to US$622 million, equivalent to
about 40% of total debt outstanding at the end of 1998. This is expected
to translate into debt relief over time of
approximately US$1.1 billion, which implies debt service savings of
roughly US$36 million per year over the next ten
years, or 40% of total yearly debt service obligations.

The HIPC initiative was launched by the IMF and the World Bank in 1996 as
the first international effort to eliminate
unsustainable debt in the world's poorest, most heavily indebted
countries. In October, the international community agreed
to major enhancements designed to make the initiative deeper, broader, and
faster by increasing the number of eligible
countries, raising the amount of debt relief each eligible country will
receive, and speeding up its delivery.

Under the enhanced HIPC initiative, IMF assistance of US$50 million (US$47
million in net present value terms) will be
provided to Mauritania, starting in 2000, by covering around one half debt
service falling due from then to 2007. IDA's
assistance to Mauritania will amount to US$185 million (US$100 million in
net present value). This relief would be
delivered over 20 years starting in February 2000 and will cover 70% of
debt service falling due to IDA. The reduction of
Mauritania's debt service to IDA would average about US$9 million per
year. Mauritania's assistance under the enhanced
HIPC initiative will be confirmed upon the granting of comparable
treatment assurances from Mauritania's other creditors.

Mauritania has established a good track record of adjustment and reform on
the macroeconomic, social, and political fronts.
Substantial structural reforms have been implemented and fiscal
consolidation has been achieved. Reflecting this effort, GDP
has grown by an annual average of close to 5% since 1992 and there has
been significant improvement in social indicators,
although 50% of the population remains under the poverty line.

In line with the enhanced HIPC initiative framework, the Boards of the IMF
and IDA supported a floating completion point,
which would be triggered by the successful implementation of a set of
predefined reforms in the macroeconomic, structural,
and social domains. In particular, to achieve the completion point will
require the preparation of a fully developed
participatory Poverty Reduction Strategy Paper (PRSP) broadly endorsed by
the IMF and IDA Boards and successfully
implemented for at least one year. The PRSP will also serve as a basis for
future concessional assistance from the IMF and
World Bank. As noted above, the IMF and the IDA will provide interim
relief-between the decision and completion
points-and the Paris Club is also expected to do likewise.