33 African Countries to Benefit from US$8.5 Debt Relief
Tunis, 4 September 2006 – The Multilateral Debt Relief Initiative (MDRI) became effective on Friday following the approval of the initiative by the Board of Governors of the African Development Fund (ADF), the concessional window of the African Development Bank (AfDB) Group.
Thirty-three regional (African) member countries would benefit from the US$ 8.5 billion debt relief under the MDRI to be provided by the ADF (list of beneficiaries: see below).
The MDRI, which was proposed by the G8 at the Gleneagles Summit on 8 July 2005, is an initiative to cancel 100 percent of the claims of three multilateral financial institutions, the African Development Fund (ADF), the International Development Association (IDA) of the World Bank, and the International Monetary Fund (IMF) on countries that had reached or would eventually reach the completion point under the Highly Indebted Poor Countries Initiative (HIPC).
The MDRI is expected to give beneficiary countries the opportunity to reduce their overall debt service payments substantially and, through continued good performance, secure additional resource flows to help them attain the Millennium Development Goals. It is estimated that the implementation of the MDRI will bring down the average net present value (NPV) of external debt to export ratio for the 18 completion point HIPCs, including the 14 regional member countries, from 140 per cent to lower than 60 per cent.
The AfDB attaches great importance to the effort of generating additional resources for the MDGs for its regional member countries In order to preserve the financing capacity of the ADF, the ADB Group reached agreement with donors on a compensatory financing mechanism by which donors have pledged to provide full financing of the MDRI. The ADF-X donor contributions of UA 2.45 billion, measured in real terms, will serve as the baseline for assessing additional donor financing for the Initiative over time.
The AfDB will continue to help its regional member countries to try and make faster progress towards the MDGs, with emphasis on promoting economic growth, sound policies, governance and effective use of resources.