IDB approves debt relief for Guyana under enhanced HIPC

The Board of Executive Directors of the Inter-American Development Bank has approved interim debt relief for Guyana within the framework of the Enhanced HIPC Initiative _ the second stage of the global program to reduce the debt of heavily indebted poor countries. Under the Enhanced HIPC Initiative, the IDB will provide Guyana with $64 million in debt relief in net present value terms in stages through 2012, of which up to one third may be delivered as interim relief.

The IDB Board took note of the participatory Poverty Reduction Strategy Paper prepared by the government of Guyana as a condition for advancing toward the completion point. The IDB, along with other multilateral donors, provided technical assistance and financing to assist Guyana in preparing its PRSP.

The Board also noted Guyana’s success in maintaining macroeconomic stability and the progress achieved towards the implementation of structural reforms since decision point was reached in November of 2000. The completion point under Enhanced HIPC is expected to be reached in 2003. Board members expressed satisfaction that Guyana’s debt is expected to become sustainable sooner than the 2009 date originally anticipated.

The IDB is Guyana’s largest creditor and largest source of debt relief under the HIPC Initiative. Under the original HIPC Initiative, Guyana reached the Completion Point in 1999, and the Bank provided $49.1 million in debt relief in net present value terms. The combined relief from the original and enhanced HIPC Initiative by the IDB will reach $113.1 million in net present value, or approximately $201.7 in nominal terms.

The combined effort of multilateral institutions and bilateral donors is expected to reduce Guyana’s outstanding public external debt by one half.

The IDB has also provided debt relief to Bolivia, Honduras and Nicaragua under Enhanced HIPC.