New ADB Assistance Policy to Post-Conflict Countries: ADB Clears 35% of Burundi’s Arrears
The intervention comes in the form of a loan of 8 million Units of Account (US$ 11.8 million) approved today by the ADB Group. The fund will enable the ADF to immediately resume lending operations to the country. The new ADB Group assistance to post-conflict countries was approved on 19 July 2004.
Burundi has fulfilled the requisite conditions to qualify for an arrears clearance program under the Bank Group’s generalized framework for post-conflict countries (PCCs). First, Burundi meets the five criteria for designation as a PCC (see box). Specifically, the country has made significant progress in re-establishing peace, improving its governance, restarting the economy, and promoting resettlement, disarmament and reintegration. The International Monetary Fund and the World Bank have similarly classified Burundi as a PCC.
The country has serviced all new maturities falling due on Bank Group, IMF and World Bank debt, demonstrating non-discriminatory debt servicing, and the country’s post arrears clearance debt service outlook appears sustainable. Finally, Burundi has made a maximum reasonable effort to pay its fair share of Bank Group arrears and has successfully collaborated with the Bank to mobilize adequate donor resources to complete the financing plan for arrears clearance.
The PCC arrears clearance framework calls for a three-way sharing of the financing costs, made up of contributions from the country, donors and the Bank Group. Burundi’s Bank Group arrears amounted to UA 22.6 million (US$ 33.2 million) at the end of 2003. ADF contribution to clear these arrears represents 35% of the total amount. Burundi has taken charge of 30% while donors absorb the remaining 35%.
The 5 ADB criteria qualifying a country
as a post-conflict country
a) The level of peace observed in the country;
b) The efforts made to establish good governance structures including sound legal and judiciary systems;
c) The resumption of normal economic activity;
d) The progress in the area of resettlement, disarmament and reintegration;
e) The position and opinions of international institutions, in particular those of the Bretton Woods Institutions.
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