By Nick Mann | 27 June 2012
The International Monetary Fund, the World Bank International Development Association and other external creditors yesterday agreed a $4.4bn debt write-off for Ivory Coast after the West African country improved its economic management.
The agreement involves $3.1bn of Ivory Coast’s debt being written off under the World Bank and IMF’s debt relief framework, the Heavily Indebted Poor Countries Initiative. Representing 24% of the country’s external debt, this will be accompanied by $1.3bn of debt relief under the Multilateral Debt Relief Initiative set up by the World Bank, IMF and African Development Fund.
As well as the IMF, World Bank and AfDB, the majority of the write-off was agreed by other multilateral bodies and the ‘Paris Club’ of the world’s biggest economies.
In a statement, the IMF and World Bank said the write-off had been approved on the basis of the ‘satisfactory progress’ Ivory Coast has made in meeting the requirements of the HIPC initiative.
These include implementation of a poverty reduction strategy, maintenance of a sound macroeconomic policy framework, regular publication of public finance information and reform of governance of its cocoa sector.
Ivory Coast was, however, granted waivers for delays with five of the programme’s other requirements relating to its publication of public finance information, after the IMF and World Bank decided it had made sufficient progress before and after its post-election crisis in late 2010 and early 2011.
Doris Ross, IMF mission chief for Ivory Coast, said: ‘Reaching the HIPC completion point represents a milestone for Ivory Coast and its population. It reflects the significant progress achieved in economic management since the Ouagadougou peace accord of 2007 and the end of the post-election crisis in April 2011.’
Reaching the completion point would help the country ‘normalise’ relations with its remaining external creditors, she said, increasing debt servicing payments in the medium term but also encouraging further support from donors and potential investors.
She added: ‘Judicious macroeconomic management will remain critical to make the country’s enormous growth potential a reality and bring prosperity to its people, while maintaining debt sustainability.’
According to the World Bank and IMF, Ivory Coast is now on track to reduce its debt from last year’s $12bn – around three times its government revenues in 2011 – to around $4.7bn this year – roughly equal to the government revenue expected this year.
Ivory Coast is still, however, considered ‘vulnerable’ to potential economic shocks which make continued strong economic management and structural reforms essential.
