Debt relief

Debt relief initiatives

The HIPC Initiative

A girl from Zambia selling fruit

In 1996, at the instigation of the G7 countries, the World Bank and the International Monetary Fund (IMF) adopted an initiative to reduce the debt burden faced by heavily indebted poor countries (HIPC). This HIPC Initiative provided a chance, for the first time, to take coordinated action on debt relief. In addition to bilateral debt cancellation, granted particularly by Paris Club creditor countries, the HIPC initiative also provides for multilateral debt relief by international financial institutions such as the World Bank and the IMF. more

The Multilateral Debt Relief Initiative (MDRI)

Pier for loading iron ore in Mauritania

In June 2005, at the Gleneagles Summit in Scotland, the G8 finance ministers agreed on the Multilateral Debt Relief Initiative (MDRI). The MDRI builds on the mechanism of the HIPC Initiative. Countries that have reached Completion Point under the HIPC Initiative can have their debts to the International Monetary Fund (IMF), the World Bank's International Development Association (IDA) and the African Development Fund (ADF) written off in full. more

Taking stock of the debt relief initiatives

Detail from a bill with series of numbers

The HIPC Initiative and the Multilateral Debt Relief Initiative (MDRI) have almost been completed. Of the 39 countries that were admitted to the HIPC Initiative, 36 have reached Completion Point and have been granted comprehensive debt relief. The significant rise in social spending in the countries that have been granted debt relief is an indication that debt relief can make an important contribution to reducing poverty. Between 2001 and 2015, their social spending increased from 6 per cent of gross domestic product to an estimated 8 per cent. more

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