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Tunis, 24 September 2010 –The Boards of Directors of the African Development Bank (AfDB) Group on Wednesday, 22 September 2010 approved a debt relief package for the Comoros noting that the country had effectively met the conditions and requirements to commence receiving debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative.
Following the approval, the Bank Group will relieve the Comoros of its USD 34.6 million debt obligations in 2009, equivalent to 31 percent of all multilateral assistance to the country.
The Comoros qualified for HIPC debt relief after having demonstrated good progress in stabilizing its economy and implementing sound policies for political, socio-economic and financial stability, growth and poverty reduction.
Four criteria were used to assess Comoros’s qualification and eligibility for HIPC assistance: satisfactory macroeconomic management and progress; widespread poverty across the country; preparation of a Poverty Reduction Strategy Paper; and unsustainable debt level.
The assessment by the AfDB Group, the International Monetary Fund and the World Bank concludes that with the implementation of agreed policy measures and reforms, Comoros has fulfilled the initial requirements to start receiving debt relief under the HIPC Initiative.
The Comoros’ overall reform performance in the last two years demonstrate encouraging first steps against the backdrop of a difficult international context, and considering the severe capacity constraints and other institutional weaknesses it faces. Going forward, it will be important for the country to continue strengthening its public finances by increasing revenue mobilization and by better aligning spending with available government resources.
The Bank Group started operations in Comoros in 1978 and has provided resources in support of the country’s development program. Cumulative AfDB Group commitments net of cancellation amount to UA 46.7 million* (equivalent to USD 70.5 million) as of 30 June 2010. Overall, the Bank Group operations in Comoros have been directed toward supporting economic-related infrastructure, budget support and improving rural livelihoods.
In February 2009, the AfDB approved UA 1.5 million (USD 2.25 million) emergency financing to assist in mitigating the adverse impact of the food crisis.
The Comoros is the Bank’s 30th Regional Member Country to reach the ‘decision point’ under the HIPC Initiative.
* 1 UA (Unit of Account) = 1.50891 USD as at 24/09/2010