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IDB members reach agreement on Bank's full participation in HIPC

Member countries of the Inter-American Development Bank have reached an agreement that will ensure the IDB’s full participation in the debt relief initiative for Heavily Indebted Poor Countries (HIPC), IDB President Enrique V. Iglesias announced on Wednesday.

"This agreement symbolizes the solidarity of borrowing and non-borrowing members of the Bank towards some of the most poverty-stricken countries in Latin America and the Caribbean," Iglesias said. "It sends a strong signal to the public that the IDB is ready to participate fully with the rest of the international community in providing substantial debt relief."

Bolivia, Guyana, Honduras and Nicaragua are the IDB member countries eligible to obtain benefits under the enhanced HIPC initiative. This program offers poor countries deep external debt reduction, enabling them to devote more resources to poverty reduction and other social investments.

The agreement was achieved on Tuesday at a meeting of a Working Group of the Committee of the Board of Governors chaired by the U.S. Treasury Department’s Deputy Assistant Secretary for International Development, Debt and Environmental Policy, William E. Schuerch.

The framework of the agreement also provides appropriate support for the participation of subregional financial institutions in Latin America and the Caribbean in the enhanced HIPC program.

Under the financial framework agreed at the meeting, the United States would contribute $200 million to the debt relief effort, Canada $25 million, non-regional members of the IDB $200 million and borrowing members from Latin America and the Caribbean $150 million.

At the meeting, members of the Working Group noted that the IDB could contribute more than $800 million of its own resources, in present value terms, towards covering the cost of its participation in the HIPC program, which was estimated at $1.1 billion or the equivalent of about $2.1 billion in nominal terms.

Members also agreed on steps to ensure that future financing provided to the four eligible countries would help them meet the HIPC goals of debt sustainability and poverty reduction.

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