Washington, DC: On December 16, 2022, Austria disbursed a €14.9 million grant (about US$15.8 million) for the International Monetary Fund’s (IMF) Heavily Indebted Poor Countries (HIPC) Initiative. This contribution will allow the IMF to provide debt relief to Somalia and Sudan once all the conditions under HIPC have been met.
The HIPC Initiative was launched in 1996 by the IMF and World Bank, with the aim of ensuring that no poor country faces a debt burden it cannot manage. Since then, the international financial community, including multilateral organizations and governments, have worked together to lower to sustainable levels the external debt burdens of the most heavily indebted poor countries.
Under the HIPC Initiative, countries must meet certain criteria, commit to poverty reduction through policy changes, and demonstrate a good track record of program performance over time. The Fund and Bank provide interim debt relief in the initial stage and, when a country meets its commitments, full debt relief is provided.
Austria’s grant is part of a larger effort to provide debt relief to heavily indebted poor countries that will free up resources for social spending to help the poor.
Background:
On March 25, 2020 and June 29, 2021, Somalia and Sudan have cleared arrears to the IMF and reached their respective Decision Points under the HIPC Initiative. The debt relief to be provided at the HIPC Completion Point will support Somalia and Sudan in implementing essential reforms by freeing-up resources to tackle poverty and improve social conditions in these countries.
The IMF provides broad support to low-income countries through surveillance, capacity building, and concessional financing to support stable and sustainable macroeconomic positions consistent with strong and durable poverty reduction and inclusive growth.