HIPC Debt Initiative. Meeting of Multilateral Creditors Washington D.C. - June 25-26,2003. Chairman s Summary

Discussions Introduction Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized 1 l HIPC Debt Initiative Meeting of Multilateral Creditors Washington D.C. - June 25-26,2003 Chairman s Summary On June 25 and 26,2003, the World Bank hosted in Washington D.C. the first of an annual cycle of meetings of multilateral creditors to heavily indebted poor countries (HIPCs). Representatives from 18 multilateral institutions and the International Monetary Fund (IMF) participated in the meeting2, and one bilateral creditor attended as an observer3. The meeting focused on progress in the implementation and financing of the HIPC Initiative, multilateral development banks (MDB) perspectives of the OED report on the HIPC Initiative, the recent debt sustainability workshops and country-specific HIPC cases. In providing an update on progress in the implementation of the Initiative since the last general MDB meeting in October 2002, World Bank and IMF staff informed participants that Benin and Mali had reached their completion points in March 2003. So far 26 countries have reached their decision points, of which eight have reached their completion points. Over time, these countries are expected to benefit from over US$41 billion in debt service relief under the Initiative. It is expected that the Democratic Republic of the Congo will reach its decision point in July 2003. 2 l Following is a summ.ary of the discu ssion.s of the key agenda items: HIPC Status of Implementation Update. World Bank staff presented the main issues that will be discussed in the upcoming Status of Implementation Report. Participants welcomed the opportunity to provide early inputs into the report. One participant asked that the report mention the difficulties which MDBs face in delivering HIPC relief due to their regulatory framework and financing constraints. Participants agreed that the quality and due diligence of the current procedures should be maintained in spite of external pressures to accelerate progress to The MDBs had met fourteen times on a semi-annual basis over the past seven years. 2 The following organizations were represented at the meeting: African Developmcmt Bank (AfDB); Arab && for Economic Development in Africa (BADEA); Arab Monetary Fund (AMF); Asian Development Bank (AsDB); CARICOM Multilateral Clearing Facility (CMCF); Central American Bank for Economic Integration (CABEI); Corporation Andina de Foment0 (CAF); Caribbean Development Bank (CD@; East African Developmmt Bank (EADB); European Investment Bank (EIB); European Commission/European Union (ECYEU); Inter-American Development Bank (IaDB); International Fund for Agricultural Development (IFAD); Islamic Dewlopment Barik (IsDB); Nordic Development Fund (NDF); Nordic Investment Bank (NIB); OPEC Fund for International Development; and West African Development Bank (BOAD). 3 The bilateral observer was the Saudi Fund for Development.

Cross-cutting 2 decision and completion points. Participants noted that they would like greater involvement in the country DSAs. For the purpose of their financial planning, some participants requested further information on the MDB costs of possible changes in the calculation of completion point topping up after excluding voluntary bilateral relief. MDB Perspectives on the OED Report on the HIPC Initiative. OED staff presented the main findings of the OED Report and World Bank staff summarized management s response. One participant commented that it is still too soon to fully assess the impact of the Initiative, and that another review should take place in a few years. Several participants cautioned against downplaying the success of the Initiative, as it was originally designed as a one-time instrument to reduce the debt burden and contribute to sustainable growth while re-engaging HIPCs with the international financial community. The report s observation that debt service payments in some countries rose after HIPC assistance must be interpreted within this context of re-engagement. Report on the Debt Sustainability Workshops. Recognizing that maintaining debt sustainability remains a challenge not only for most HIP&, but also for other low income countries, the World Bank and the IMF are in the process of developing new approaches to address the issue. The objective is to develop an analytical framework to provide adequate financing to meet the MDGs, while at the same time, avoid the accumulation of debt to unsustainable levels. The main themes arising from the three debt sustainability workshops- Paris, Berlin and Accra-were summarized for the participants. Participants stated their interest in these discussions, and agreed to hold an ad hoc meeting on debt sustainability in late October at the OPEC Fund headquarters in Vienna. Treatment of Multilateral HIPC Relief in Resource Flows and Their Reporting. World Bank staff provided an overview of the Debtor Reporting System. Staff solicited the MDBs assistance in providing data on HIPC flows, especially on HIPC assistance delivered and projected annual debt relief. World Bank staff will prepare a draft template for the required data which will be discussed at a special session at the next ad hoc MDB meeting. Addressing Arrears Clearance Issues. In the spirit of the conclusions of the February ad hoc MDB meeting on arrears issues, representatives from AfDB shared with participants their early thinking on a proposed framework for clearing arrears in the remaining HIPCs. Participants expressed their appreciation to the AfDB, and welcomed similar contributions from other MDBs. Similarly, World Bank and IMF staff shared with participants an update of the status of Sudan s current debt situation and progress in the peace process, as well as illustrative approaches for arrears clearance, the normalization of Sudan s international financial relations, and eventual access to HIPC debt relief. Participants urged World Bank and IMF staff to ensure that all concerned multilateral creditors are invited to future meetings on arrears issues. Participants were also presented with a possible timeline for clearing arrears in the Republic of Congo (Brazzaville). Country Cases. Staff presented updates on the Democratic Republic of the Congo, Ethiopia, Sudan, Rwanda, and the Republic of Congo. 3 l Issues. Two additional cross-cutting issues emerged during the discussions:

3 Sunset Clause. Participants noted that the sunset clause was extended to end-december 2004, and discussed the possible implications of complying with this date, given that several remaining countries, most of which are affected by conflict, are unlikely to reach their decision points by then. All agreed that the implications of the sunset clause need to be assessed by the MDBs as soon as possible, including alternative arrangements for these countries if the sunset clause is not extended. How these remaining cases are treated will affect the financial planning of MDBs, and in some select cases, perhaps even their financial integrity. Grant ElementKoncessionality of New Lending. Several participants asked for reexamination of the minimum grant element requirement for new lending to HIPCs under PRGF programs. Some MDBs find it hard to meet this requirement in the current low interest rate environment. One participant shared his institution s experience of combining own nonconcessional resources with donor funds to meet the grant element requirement. 4 a Participation of Multilateral Creditors During a tour de table, representatives from participating institutions reported on the financing and delivery of debt relief by their respective institutions since the last general MDB meeting of October 2002. Details of the status of participation of each institution are summarized in Annex II, based on information provided by the participants during the meeting. HIPC Trust Fund. World Bank staff reported that at the HIPC technical meetings in October 2002, donors pledged an additional US$sSO million to support debt relief by regional and sub-regional multilateral creditors. This brings the total pledged by donors to the HIPC Trust Fund for these creditors to close to US$3.4 billion. Of this, paid-in contributions have reached US$2.5 billion. Taking into account updated costing figures, the approximate timing of decision and completion points, and the currently assumed use of internal resources, it is estimated that these pledges should cover most of the remaining financing requirements of the HIPC Trust Fund (excluding costs for Laos, Liberia, Somalia and Sudan). It is recognized that there remain several important unknowns which could affect the financing requirements of the HIPC Trust Fund, including potential topping up costs. International Development Association (IDA). Staff reported that total IDA debt relief delivered to end-june 2002 amounted to US$2 billion for the 26 countries having reached their decision points. Total IDA debt relief to be delivered to the 34 countries which could be eligible to received debt relief under the enhanced HIPC Initiative (excluding any topping up costs) is now estimated at about US$l3.5 billion. On average, IDA s total debt relief costs are estimated at more than US$500 million per annum. IDA s costs through IDA-13 are expected to be covered through the World Bank component of the HIPC Trust Fund. As agreed by donors during the IDA-13 discussions, costs after the IDA-13 period will be addressed in 2004 at backto-back meetings during the IDA- 14 replenishment discussions. African Development Bank Group (AfDB). AfDB distributed their progress report on the Initiative to participants. As of end-march 2003, about US$410 million in relief had been delivered to 22 HIPCs. Fifteen of these 22 countries in their interim period, and 7 have reached their completion point. A growing number of HIPCs that have reached their decision point have

experienced delays in attaining their completion point. As a result, the 40-percent ceiling on AfDB interim relief will soon be reached by several countries. Arab Bank for Economic Development in Africa (BADEA). BADEA hopes to present debt relief packages to their Board in October 2003 for Burkina Faso, Mali and Benin to deliver their full share of HIPC debt relief. The delivery of debt relief to Tanzania remains problematic, and other modalities are currently being explored. Arab Monetary Fund (AMF). Mauritania is the only country which is currently eligible to receive HIPC relief from the AMF. An agreement has been reached with the Mauritanian authorities to provide full debt relief over the period 2003-2007. Sizeable stocks of arrears are owed to the AMF by Sudan and Somalia. Three issues were raised and circulated to the participants on: (a) the concessionality/grant element of new lending; (b) the clearance of arrears; and (c) the impact of debt relief on the financial integrity of AMF. Asian Development Bank (AsDB). The AsDB does not have any arrears owed by HIPCs. Caribbean Development Bank (CDB). Guyana, where debt sustainability is increasingly becoming an issue, is the only HIPC country in which CDB has exposure. CARICOM Multilateral Clearing Facility (CMCF). One creditor to CMCF is finding it difficult to deliver debt relief. Discussions are being held to explore various modalities. Central American Bank for Economic Integration (CABEI). CABEI has a funding gap to provide its full debt relief to Nicaragua at completion point. CABEI is working on a strategy to mobilize the additional donor support in coordination with the HIPC Unit. Corporacih Andina de Foment0 (CAF). Bolivia is the only HIPC country in which CAF has exposure, and full debt relief has been provided. East African Development Bank (EADB). EADB has reconciled its debt statistics with Uganda and Tanzania. EADB s current modalities consist of lowering the interest rate and extending the loan payments. The EADB representative stated that there might be a possibility to explore other modalities of delivering HIPC relief and plans to request support from the HIPC Trust Fund. European Commission (EC). Interim relief from the European Union is proceeding smoothly. The EC commissioned a study on the management of HIPC funds in recipient countries, and made it available to participants. The EC is planning to launch a study on post- HIPC debt sustainability. European Investment Bank (EIB). So far, the six countries having reached their decision point are eligible for debt relief from the EIB. The DRC is expected to become the seventh eligible country. Since the previous general MDB meeting, the EIB has provided full debt relief to Mauritania, following its completion point. Inter-American Development Bank (IaDB). To date, the IaDB has delivered US$360 million in nominal debt relief to four countries. IaDB is providing.a, interim relief on schedule.

5 Honduras has reached the one-third limit interim relief limit, and will not be receiving any more debt relief until it reaches the completion point. International Fund for Agricultural Development (IFAD). IFAD has approved debt relief for the 26 countries which have reached their decision point. IFAD has started to provide relief to the 8 completion point countries, but is not providing interim relief from own resources. Discussions are being held with several donors concerning the possibility of donor funding to help IFAD provide interim relief. Guinea-Bissau and Sierra Leone benefited from interim relief from IFAD owing to the treatment of arrears. So far US$50 million in relief has been provided, and annual flows are estimated at between US$30-40 million. Islamic Development Bank (IsDB). The IsDB s total HIPC relief in terms currently stands at US$l30 million. Debt relief to 12 out of 13 countries has been approved by the Board. Four countries are receiving interim relief. Agreements have been signed with an additional five countries, and IsDB is planning missions to the remaining countries to reconcile data. Nordic Development Fund (NDF). NDF has signed debt relief agreements with 7 out of 9 HIPCs in which NDF has exposure. All of NDF s share of debt relief for 6 out of 9 countries has been delivered to the HIPC Trust Fund, accounting for 65 percent of NDF s total share of debt relief under the Initiative. Nordic Investment Bank (NIB). NIB has exposure in only one HIPC country, Cameroon. The Board of NIB approved assistance to Cameroon in December 2000. NIB will channel its contribution through the HIPC Trust Fund and provide its share of relief from the completion point over a three-year period. OPEC Fund for International Development. The OPEC Fund indicated that, with the exception of Guinea-Bissau and Sierra Leone, commitment to deliver HIPC debt relief has been confirmed. Delivery agreements have been signed with most countries, and interim or full debt relief started in 2001. Honduras has yet to sign the debt relief agreement with the OPEC Fund. It is expected that the agreement with Uganda will be signed shortly. Arrears owed by the remaining counties to enter the HIPC process represent about 90 percent of the total stock of arrears due to the OPEC Fund. An arrears clearance arrangement with Sierra Leone is likely to be concluded before the end of the year, and the arrears arrangement signed with the Republic of Congo will be implemented soon. West African Development Bank (BOAD). Five member countries are eligible to receive HIPC debt relief, and BOAD continues to deliver interim assistance without interruption. Upon reaching the completion point, Burkina Faso received a debt stock reduction. Modalities for delivering full relief to Mali and Benin are being finalized. Saudi Fund.4 The Saudi Fund has concluded debt relief agreements with 16 countries under the HIPC Initiative through arrears clearance and debt rescheduling. The Saudi Fund is currently communicating with other HIPCs to reach rescheduling agreements. Arrears owed by most HIPCs have been cleared, except those owed by conflict-affected countries. 4 Bilateral creditor participating in the meeting as an observer.

5 0 Feed-back Session on the MDB Meetings 6 Participants were given the opportunity to provide feedback on the content and format of the MDB meetings. It was agreed that the next general meeting would take place during the last week of June 2004, and that an ad hoc meeting will be held in late October 2003 on the subject of debt sustainability.

Annex I. HIPC Initiative: Committed Debt Relief and Outlook l/ Status as of June lo,2003 (In millions of U.S. dollars) Reduction in Terms 21 Nominal Debt Service Relief Original Original Enhanced Enhanced HIPC HIPC HIPC Initiative Total HIPC Initiative Total Initiative Initiative Countries that have reached their Completion Points (8) TOTAL 2,862 5,470 8,333 Benin 0 265 265 Bolivia 448 854 1,302 Burkina Faso 31 229 324 553 Mali 121 417 539 Mauritania 0 622 622 Mozambique 1,717 306 2,023 Tanzania 0 2,026 2,026 Uganda 347 656 1,003 Countries that have reached their Decision Points (18) TOTAL 256 Cameroon 0 Chad 0 Ethiopia 0 The Gambia 0 Ghana 0 Guinea 0 Guinea-Bissau 0 Guyana 256 Honduras 0 Madagascar 0 Malawi 0 Nicaragua 0 Niger 0 Rwanda 0 Szo Tome and Principe 0 Senegal 0 Sierra Leone 0 Zambia 0 Countries still to be considered (12) C&e d Ivoire 41 345 Burundi Central African Republic Comoros Congo, Dem. Rep. of 0 Congo, Rep. of Lao PDR Liberia Myanmar..* Somalia Sudan Togo 16,185 16,441 440 25,610 26,050 1,260 1,260 0 2,000 2,000 170 170 0 260 260 1,275 1,275 0 1,930 1,930 67 67 0 90 90 2,186 2,186 0 3,700 3,700 545 545 0 800 800 416 416 0 790 790 329 585 440 590 1,030 556 556 0 900 900 814 814 0 1,500 1,500 643 643 0 1,000 1,000 3,267 3,267 0 4,500 4,500 521 521 0 900 900 452 452 0 800 800 97 97 0 200 200 488 488 0 850 850 600 600 0 950 950 2,499 2,499 0 3,850 3,850 2,224 5,773 *., 0.. 2,569 5,773 *.. 5,730 8,965 14,695 0 460 460 760 1,300 2,060 400 530 930 220 675 895 0 1,100 1,100 3,700 600 4,300 0 3,000 3,000 650 1,300 1,950 800 3,100 0 9,800 3,900 9,800 a.. Date of Approval Apr-03 Jun-0 1 Apr-02 Mar-03 Jun-02 Sep-0 1 Nov-0 1 May-00 act-00 May-O 1 Nov-0 1 Dee-00 Feb-02 Dee-00 Dee-00 Nov-00 Jul-00 Dee-00 Dee-00 Dee-00 Dee-00 Dee-00 Dee-00 Jun-00 Mar-02 Dee-00 Mar-02 51 Jun-02 5f Memorandum item: Debt relief committed 3,463 under original and enhanced frameworks 61 Sources: HIPC Initiative country documents; World Bank and IMF staff estimates. 21,655 25,117 6,970 34,575 41,545 I/ Commited Debt Relief under the assumption of full participation of the creditors. 2/ As of the completion point year for the Original HIPC Initiative and as of the decision point year for the Enhanced HIPC Initiative. 31 The assistance under the enhanced HIPC Initiative includes the topping up with the calculated in terms of the completion point year, 41 It is suggested that debt relief under the original framework be overtaken by HIPC relief under the enhanced framework. 5/ Preliminary document issued. 6/ Countries that have reached their decision points under the enhanced HIPC framework through end-june 2003 and C&e d Ivoire, which had reached the decision point under the original framework earlier.

Formal Agreement to Status of IFI Participation as of 7/8/2003 ANNEX - II nternational Financial Participate reached: Modalities of Participation Modalities of Participation Provision of Interim relief Comments/Next steps nstitutions (IFI) Original Enhanced under Original Framework under Enhanced Framework Uame Framework Framework Three instruments used to provide IDA will deliver, to the extent feasible, its full IDA debt relief will begin at the While the HIPC Trust Fund has adequate resources to, HIPC debt relief on IDA debt: share of debt relief to the country within 20 decision point, with the cover IDA debt service relief costs under HIPC for the next Credit cancellation, forgiveness of years after the decision point. Within this maximum level of debt relief few years, additional financing will be needed to avoid IDA debt service as it falls due, objective, IDA will provide annual relief of not provided during the interim erosion of IDA s lending capacity as foregone IDA reflows and IDA grant funding. less than 50% of IDA debt service due on the period equal to one third of the start occurring by 2005. With the latest transfer from IBRD amounts disbursed and outstanding at the total to be provided to the (net income of US$250 million) the total amount allocated tc reference year when HIPC assistance is country by IDA. the HIPC Trust Fund for IDA is US$1.3 billion. calculated. For IBRD cases, debt relief would Norld Bank be provided through a combination of IDA debt service grants during the interim period and refinancing on IDA terms at the completion point. MF Grants which are paid into the Delivers HIPC Initiative assistance in the form Beginning in the decision point The IMF has secured sufficient resources to finance its country s account at the completion of grants which are paid into the country s year, a country may receive as participation in the HIPC Initiative (excluding the potential point, administered by the IMF as account in annual tranches starting at the much as 20% of total IMF debt relief cost for Liberia, Somalia and Sudan). Trustee, and used to help meet its decision point, subject to satisfactory assistance each year (up to debt service payments to the IMF. assurances by other creditors. The account is 25% in exceptional cases) administered by the IMF as Trustee, and used between the decision and to help meet the country s debt service completion points, up to the payments to the IMF. The balance of total of IMF debt service due committed assistance, including interest on by the country to the IMF each amounts committed but not disbursed during year, with interim assistance the interim period, is delivered at the completion not to exceed 60 percent (75% point. in exceptional cases) of overall IMF debt relief. African Development 3ank (AfDB) Loan cancellations 80% relief on annual debt service obligations. Maximum of 40% of total debt Agreement among Deputies of the AfDF on a global funding Delivery in 15 years, if possible, in order to be relief in terms during the process for the AfDB Group at the end of June 2000. In consistent with HIPC principle of front-loading interim years. July 2000, AfDB Board of directors decided to increase the and 2015 international development goals. If AfDB s contribution of its own resources to US!5370 million. relief cannot be delivered in 15 years, then it will At the decision point, the AfDB could make a commitment be delivered for as many years as needed. for the full interim relief and assurances by donors would be provided to fund the remaining debt relief by the completion point. Total available resources in the HIPC Trust Fund is US$276 million. The Board approved twenty two countries and seven countries for their decision and completion points, respectively. The ten remaining countries are expected to reach their decision points before the end of the Sunset Clause.

Status of IFI Participation as of 7/8/2003 ANNEX - II International Institutions Name Financial (IFI) Asian Development Bank (AsDB) Formal Agreement to Participate reached: Original Framework =om?al agreement in )rinciple. Enhanced Framework Formal agreemenl in principle. Modalities of Participation Modalities of Participation under Original Framework under Enhanced Framework Not applicable To be determined as necessary. Full Darticipation in review of Asian countries PRSP development. and Provision of Interim relief Comments/Next To be determined. Only minor exposure in Lao PDR and Myanmar. AsDB does not expect any HIPC cost in the short run. Lao PDR has opted out of the Initiative, and Myanmar is currently inactive. Vietnam is a likely sustainable case. In a preliminary debt sustainability analysis by the IMF, the Kyrgyz Republic has been identified as meeting the HIPC criteria. However, the government has not shown any signs that it wishes to be included into this initiative and is currently negotiating with the Paris Club. There is uncertainty on Tajikistan s eligibility but it too has not been formally identified as a HIPC candidate. Inter-American Development (IaDB) Bank nterest subsidy on ordinary capital oans, and write-off of selected SO loans Assistance will cover approximately 50% of debt service on FSO loans and subsidy to selected Ordinary Capital loans during 2001-2008. Beyond 2008, assistance includes selective cancellation of principal repayments 3n FSO loans. nterim relief is being provided or Guyana, Honduras and Nicaragua with the amount of *elief not to exceed l/3 of the :otal debt relief committed to?ach country. Financing framework in place by means of direct contributions from borrower member countries through the conversion of local currencies, non-borrowers member countries through contributions to the HIPC Trust Fund, and the use of FSO internal resources. Bolivia reached completion point in 2001, the remaining three countries (Honduras, Guyana and Nicaragua) expected to reach completion point in 2003. Arab Bank for Economic Developmenl in Africa (BADEA) (es, on a :ountry-by- :ountry Iasis., on a countryoy-country basis. Concessional clearance of Concessional clearance of arrears. arrears. Concessional rescheduling of debt Concessional rescheduling of debl -Reduction of interest rates #Reduction of interest rates nterim relief could be considered within the ramework of present nodalities used by BADEA in :he form of arrangements for settlement of arrears for -lipcs in arrears to BADEA. Such arrangements have already been reached between 3ADEA and countries like Rwanda, Burundi, Niger, Suinea Bissau, Sao Tome and Wncipe, Central African?epublic, Zambia, Sierra,eone, Cape Verde, Congo Chad and Guinea Bissau (if mplemented). Uganda and Mozambique cases have already been approved and have been fully delivered. BADEA will consider the case of Burkina Faso (topping up and enhanced) as well as Mali, under both original and enhanced framework. Benin, Cameroon, Madagascar, Niger, Gambia, Senegal, Sao Tome and Principe, Tanzania, Guinea, Guinea-Bissau, Malawi and Zambia will be considered under the enhanced framework at the level of agreement in principle until formally approved on a case-by-case basis once each of these countries reaches its completion point and its case is presented to BADEA s Board of Directors for consideration. Arab Monetary WV Fund, on a country- Dy-country basis. The modality of participation shall be casespecific and may include and combine :oncessional rescheduling, Relief by partial -eduction of debt installments due on existing oans and concessional resolution of arrears. n what relates to Mauritania, 4MF agreed with Mauritania to deliver debt relief over a five- /ear period through a 75% martial reduction of all debt nstallments due on existing oans starting June 30,2003.rntil the full relief is delivered my October 2007

Formal Agreement to Status of IFI Participation as of 7/8/2003 ANNEX - II International Financial Participate reached: Modalities of Participation Modalities of Participation Provision of Interim relief Comments/Next steps Institutions (IFI) Original Enhanced under Original Framework under Enhanced Framework Name Framework Framework The CDB has delivered its Debt service relief. Already providing relief through Board of Directors meeting, Barbados, July 13,200O assistance under the original 2002 under original HIPC approved the participation of the CDB and came to an framework through contributions to Initiative. understanding on financing. Financing framework: US$S.S a fund which covers debt serivce million in terms out of Accumulated Net Income of the for a number of CDB loans through SDF of the CDB, and Canada, Germany, Italy and UK to Caribbean Development 2002. (Board of Directors decision provide the remaining US$4.2 million in terms, Bank (CDB) to participate of October 16, 1997). approved by the Board of the CDB the week of October 10, 2000. CARICOM Multilateral Clearing Facility (CMCF), in principle The CMCF has already written Several modalities have been explored by the To be delivered. The Board of the CMCF at its meeting in November 2001 and subject to down the common phase of its technical working group including reschedulings agreed, at the request of one of the major creditors of the Board approval. outstanding claims on Guyana, to with extended repayment periods and lowered facility, to revisit the modality previously agreed by the deliver debt relief of US$26.7 interest rates, with a potential financing gap of Governors. This was done in an effort to deliver the million and received support from US$3-5 million to be covered by donor support. required relief without inflicting any undue burden to any of the HIPC Trust Fund to cover the the creditors. The technical team provided another option remaining relief of US$2.4 million. which includes a longer maturity period, and futher reductions in the interest rate in order to provide reduction in the of US$25.9 million. The remaining gap was US$3.0 million which the HIPC Trust Fund had agreed to finance. More recently, the major creditor member indicated its inability to provide its proposed share of the debt relief even under the modified option. Discussions are ongoing to find a resolution to the issue. Central American Bank Nicaragua. for Economic Integration (CABEI), subject, subject to Cancellation of debt and loan to donor donor support to restructuring. support to complete the complete the financing of its financing of debt relief share its debt relief for Nicaragua. share for Honduras: providing full debt relief share of, interim relief is being Endorses enhanced framework as long as it is consistent US$73 million () by extending the maturity provided for Honduras and with maintenance of CABEl s financial integrity and and reducing the interest rate of loans; with Nicaragua, financed with development in the international financial markets. To date US$62.5 mn () from internal resources and CABEl s internal resources and total donor resources committed to support CABEl s debt UWO.5 mn () from HIPC Trust Fund donor contributions channeled relief costs for Honduras and Nicaragua amount to donor transfers (US$12 million in nominal through the HIPC Trust Fund US$232.2 million (nominal value). In the case of value).. and the CABEI-HIPC Special Honduras, CABEI has completed the financing required to Nicaragua: providing US$166 million () of Fund. deliver its full debt relief share. In the case of Nicaragua, total debt relief share (US$435.3 million ) CABEI needs additional donor support to complete its debt with internal resources, by canceling debt, and relief share at completion point, in the approximate amount extending the maturity and reducing the interest of US$47.2 million () and to cover a financing gap, rate of loans. Additional debt relief being currently estimated at US$6.2 million (), corresponding provided with donor transfers through the HIPC to the variation in terms from the application of Trust Fund and CABEI-HIPC Special Fund, by nominal value contributions. reducing debt-stock and a covering a portion of CY 2001-2002 debt service obligations. Mostly front-loaded prepayment of Mostly front loaded stock-of-debt relief starting No. Front-loaded stock-of-debt On December 7,2000, the Board of Directors approved future debt maturities, using off- 2001, using HIPC Trust Fund resources and off- relief will be delivered directly management s proposal to allocate US$20 million in balance resources and HIPC Trust balance-sheet funds assigned from net income to Bolivia over a period of 5 terms from net income to cover the additional cost of relief Fund resources and annual grants in 2001 and to be assigned over an additional years, starting in 2001. under the enhanced HIPC Initiative. The shareholders to cover debt service as it comes four-year period. US$20 million relief by assembly ratified the decision of the Board at their March Corporation Andina de due. US$19.5 million relief by CAF, and remaining US$33 million relief 2001 meeting. The remainder of the assistance requires Foment0 (CAF) CAF; US$19.5 million relief by HIPC Trust Fund. resources from donors, and CAF could be eligible for by HIPC Trust Fund. funding from the IDB/subregional framework agreement.

Formal Agreement to Status of IFI Participation as of 7/8/2003 ANNEX - II International Financial Participate reached: Modalities of Participation Modalities of Participation Provision of Interim relief Comments/Next steps Institutions (IFI) Original Enhanced under Original Framework under Enhanced Framework Name Framework Framework Provision of grants to cancel EU As donor: the EU is providing contributions to. Possibility of suspension EC is involved both as a donor and as a Creditor: As a loans at the completion point. the HIPC Trust Fund in order to cover the on a yearly basis during the Donor: In July 2000, EU concluded two Contribution financing needs of specific regional MDBs in interim period. Agreements with the HIPC Trust Fund for ACP (Euro 680 Sub-Saharan Africa, Latin America and Asia. million including 670 million for AfDB) and Latin America As Creditor.- At the completion point, the EU and Asian countries (Euro 54 million). A first tranche of will provide grants to make possible the full or Euro 250 million for ACP countries and the totality of Euro European Commission/ partial cancellation of loans based on agreed 54 million for Latin America and Asia was disbursed in July European Union HIPC debt-reduction ratios. During the interim 2002. A second tranche of Euro 250 million was released (EC/EU) period, the EU will provide debt relief through to the HIPC Trust Fund in January 2002. A decision on the suspension of debt service on concerned special loan cancellation, implying a further Euro 60 million loans. commitment to HIPC has been taken in 2002. Euro 200 million has also been released to the EIB Trust Fund for debt relief of EU loans (special loans and risk capital). European Investment Bank (EIB) Debt relief will be applied towards Debt relief will be applied to EC/EU loans and, interim relief on debt EIB will cover its full cost with internal resources up to 60 prepayment of EC/W loans. EIB s will take the form of: debt service relief during service falling due. (EIB can million Euro for the enhanced framework and IO million Board of Directors approved a the interim period, and prepayment of loans at suspend delivery of debt relief Euro for the original framework. So far, six countries contribution of IO million Euro to completion point. up to the completion point to a (Cameroon, Ghana, Guinea, Malawi, Mauritania, Senegal) HIPC based on loans made to country where EU are eligible for interim debt relief from EIB. Interim debt eligible borrowers from the Bank s development aid has been relief has already been provided to Mauritania, Malawi, own resources. suspended on political Senegal and Guinea. Provision of relief of Ghana requires grounds.) new modalities. Relief at completion point has been provided to Mauritania. No No Not currently participating. Fund for Cooperation Compensation & Development; Economic Community of West African States (ECOWAS Fund) East African Development (EADB) Bank Reduce interest rate on Reduced interest rate on one outstanding loan No Formal approval by Governing Council to participate in outstanding loans to Uganda and to Uganda and extended repayment period. For December 2000. Next step should be to sign bilateral extend repayment period by 3 second Uganda loan, waiver of interest accrued agreement with the Governments. years (total maturity: 10 years). on principal outstanding. For Tanzania, Applied to HIPC Trust Fund for reduced interest rate on outstanding loan and assistance. extended repayment period. Arab Fund for Economic and Social Development (FADES/AFESD) n/a n/a Concessional refinancing (10 years grace, 40 To be determined. Formal Board of Directors approval of participation in HIPC years maturity, interest rate of 0.5%). program on June 12,200O. Letter dated February 20,200l indicates that relief will be provided through a new loan to replace old loans along with new lending terms for old loans

Formal Agreement to Status of IFI Participation as of 7/8/2003 ANNEX - II International Financial Participate reached: Modalities of Participation Modalities of Participation Provision of Interim relief Comments/Next steps Institutions (IFI) Original Enhanced under Original Framework under Enhanced Framework Name Framework Framework Makes country-specific NDF will continue to make country-specific NDF will front-load its Letter of January 26,200l to Mr. Wolfensohn and Mr. contributions to the HIPC Trust contributions to the HIPC Trust Fund to cover assistance under the Fischer announced that the Nordic Council of Ministers Fund to cover its share of its share of relief. Covers 100 percent of Enhanced Initiative to the passed a resolution in August 2000 to amend the statutes relief. Covers 100% of country s country s debt service due to the NDF as it falls fullest extent possible. NDF will of the NDF to faciliate contribution to debt relief initiatives. debt service due to the NDF as it due commencing at completion point, until the not provide interim relief. Authorisation to bring forward NDF s engagement in the falls due (applies to identified debt contribution is exhausted. Initiative in accord with the resolution was obtained in only) until the contribution is December 2000. Assistance confirmed for Bolivia, Nordic Development exhausted. NDF s contribution to Ethiopia, Ghana, Malawi, Mozambique, Nicaragua, Fund (NDF) the Initiative will be financed by Senegal, Tanzania and Uganda. Assistance for Bolivia, NDF s accumulated and future net Malawi, Mozambique, Senegal, Tanzania and Uganda has income. been delivered in full to the HIPC Trust Fund. OPEC Fund for International Development (OPEC Fund) On a country-by-country basis, Same as the Original Framework., on a case-by-case basis. Approval by Ministerial Council in June 1996 of OPEC Fund possibility of: new concessional participation in the Initiative. Special HIPC Facility created credit from a H!PC account funded to finance HIPC contributions; Normal lending programs to by transfer from excess of HlPCs maintained at an enhanced level. revenues over expenditures; reduction of interest and service charges on existing loans; restructuring of principal installments; or a combination of the three. Central Bank of West African States (BCEAO) Concessional rescheduling (15 Same as original, but rescheduling over 24 This point must be submitted Under the original framework, BCEAO had confirmed a years, 0% interest) of the years-rather than 15--no grace period, at no for approval by the Council of contribution of CFA Francs 15.6 billion. Under the enhanced outstanding debt at the completion interest (approved September 14,200O) Ministers as this is a new framework, an additional CFA Francs 8 billion will be point for each eligible HIPC country concept compared to the provided. BCEAO intends to request donor support to cover (Benin, Cote d lvoire, Mali, and present modalities. the additional cost. Senegal). West African Development (BOAD) Bank Debt-stock reduction through the Debt-stock reduction or payment of debt Depending on external The original HIPC framework assistance for the two HIPC Trust Fund for Burkina Faso service can be used depending on the external resources mobilized, BOAD countries (Burkina Faso, Mali) has been delivered. Under and Mali has been used. resources to be mobilized through the HIPC wishes to extend maximum the Enhanced framework, BOAD delivered interim Trust Fund. BOAD s internal resources will be feasible assistance in the assistance announced in 2001 to four countries (Benin, used along with external resources. interim period (maximum of Burkina Faso, Mali and Senegal). Assistance to Burkina 20% per year). Faso has been fully implemented following the completion point.

BENIN ANNEX- III Multilateral Debt Relief under the Enhanced HIPC Initiative: Status as of 7/8/2003 of debt Share of Multilateral Debt Debt Relief Satisfactory Modalities To Comments at end-1998 (in terms at end-98) (end-1998) Reply Deliver Debt Relief (US$ mil.) % 1 Cumulative (US$ mil.) 21 Assistance to cover 50% of debt service on disbursed and outstanding IDA credit Assistance is being delivered through partial payment of debt service falling due to the IMF by the PRGF-HIPC Trust. Interim assistance as of July 2000. Share of debt service due on current obligations covered by IMF assistance averages 31% over 2000-2007. Commitment to provide interim debt relief, with effect from June 2000. Interim relief will not exceed 40% of the total debt relief. Assistance would cover 80% of the debt service falling due, and will be delivered over IO years. At the completion point, AfDB will enter into an irrevocable debt relief commitment. Debt-service relief on identified EC loans during the interim, supplemented with grants to pay off EC loans at the completion point. Debt rescheduling. Board approval in July 2000. Decision approved by AfDB Board on October 31,200O. AfDB : Completion point s approval in July 2003. EC intends to provide necessary assistance with respect to Community-level (special loans and risk capital) claims. Also intends to assist AfDB to alleviate its claims vis-a-vis the ccuntry, through the Trust Fund. On February 12,2002, EC requested that EIB deliver interim relief on behalf of EC. Debt relief implemented. Up to 100% debt service relief until target is Board approved enhanced HIPC relief in December 2000. achieved from the completion point. Concessional refinancing of debt through a new HIPC loan of New loan agreement providing HIPC debt relief signed on May 2001.Disbuserd on May 16 2002. Debt relief fully delivered. Concession rescheduling of debt and reduction of Approval in principle -- Fax of November 6,200O. Not currently participating. Debt service relief in the interim period. BOAD delivered the interim assistance announced for 2001 Agreement with Benin in August 2001 to provide interim debt service relief during 2001. Full implementation At the completion point - rescheduling of debt over 24 years, no grace period and zero interest. I/ For all retroactive cases, end-1998 is the reference date under the Enhanced HIPC Initiative for calendar-based countries (except for Burkina Faso which uses end-99 data). Fiscal-year-based countries use end-june 99 data. (DP document for Benin is dated June 27,200O) 2/ The amount of assistance is estimated using the exchange rates at the decision point. 3/ Revised figure for outstanding of debt should be US$15.0 million, of debt relief should be US$4.7 million.

BOLIVIA Multilateral Debt Relief under the Orirrinal HIPC Framework: Status as of 7/8/2003 Share of Multilateral Debt of debt Satisfactory Modalities To Implemented Comments (in terms) at end-1996 Debt Relief I/ Reply Deliver Debt Relief % Cumulative (US$ mil.) (US$ mil.) DA 18.7 18.7 402 54.4 HIPC Trust Fund is covering 100% of debt service On September 22, 1998, the Executive Board agreed that the completion due on behalf of Bolivia, on 61 IDA credits, from point was reached. Delivery started as of October ;11998. the last quarter of 1998 until these resources, Resources will most likely be exhausted in early 2002. including interest earned, are exhausted. adb 53.3 72.0 1146 155.0 Combination of write-offs of selected concessional loans and partial payment of interest on other selected loans ZAF 13.4 85.5 289 39.1 Strongly front-loaded debt service relief through contributions from existing off-balance sheet special funds as well as from future net income, and from the HIPC Trust Fund. MF 10.0 95.5 215 29.1 PRGF HIPC Trust (provision of PRGF grant to cover debt service) Write-offs from the Fund for Special Operations (FSO) and partial payment of interest on selected loans from Ordinary Capital using Intermediate Financing Facility. Significant frontloading will provide over 60% of relief by 2003. Partially Letter sent to Bank/Fund in July 1998. US$13 million of assistance were provided by CAF in 1998. US!$l9.5 million of assistance were provided through the HIPC Trust Fund in 1999, US$6.5 million are being delivered through grants for technical cooperation, at at rate of US$l million per year over approximately 9 years. (US$l million in nominal terms disbursed in 2000, 2001 and 2002). On September 23, 1998, the Executive Board agreed that the completion point was reached. The IMF s contribution of US$29 million was transferred on September 28, 1998. :ONPLATA 2.7 98.2 58 7.8 Fonplata has extended the amortization period on selected outstanding loans by 8.5 years with a lower interest rate. Proposal to use donor resources to cover payments beyond the FONPLATA 20 year horizon. Executive Board of Directors Resolution dated September 3, 1998. The restructuring of the loan portfolio with the new terms has been effective since mid-september 1998, delivering US$3.9 million in terms. Remainder (US$3.9 million in end-2000 terms) to be covered by donor assistance provided under the HIPC Trust Fund. FAD 1.2 99.4 25 3.4 Coverage of 100% of debt service falling due. Board decision of September 9, 1998. Delivery started in late 1999, completed in 2000. IPEC Fund 0.6 99.9 12 1.6 Disbursed a new US$4.1 million loan which has a higher grant element than existing loans (proceeds to be used to pay debt service on existing debt). Agreement with OPEC Fund signed on August 30,1999. Loan described in modalities has been ratified by Parliament, end-2000. Relief under original HIPC has been delivered. Loan disbursed on December 6,200l. SDF 0.1 100.0 2 0.3 Contribution to the HIPC Trust Fund which will pay 100% of debt service as it falls due at completion point. Board Decision of June 12, 1998. Grant Agreement on March 22, 1999. 100% assistance has been delivered to the HIPC Trust Fund. I/ Common reduction factor applied to exposure at the decision point is 13.53%.

BOLIVIA Multilateral Debt Relief under the Enhanced HIPC Initiative : Status as of 7/8/2003 Share of Multilateral Debt of debt of debt Debt Relief Satisfactory Modalities To Implemented Comments (in terms at end-98) 2/ at end-1998 at end-1998 (end-1998) Reply Deliver Debt Relief % Cumulative (US$ mil.) 3/ (US$ mil.) 41 (US$ mll.) 51 Assistance to be delivered over 14 years, starting in June 2001, through a 50% reduction in debt service falling due on IDA credits outstanding as of end-2000. Assistance will cover reduction of debt service on FSO loans through 2008. Beyond 2008 selective cancellation of principal repayments on FSO loans. Total assistance will be delivered over 19 years. Board approval for Bolivia s enhanced assistance on January 27, 2000. Completion point document approved Board approval for the completion point on June 2001. The IDB will provide Bolivia with US$307 million in total debt relief through Front-loaded stock of debt relief over a four-year period, using off-balance sheet funds to be assigned from net income and HIPC Trust Fund resources. US$41.3 m of relief provided in 2002. The remaining relief to be delivered by CAF -- US$5 m per year until full Assistance to be delivered over 8 years, starting in 2001 through partial payment of debt service falling due to IMF by the PRGF-HIPC Trust. Share of debt service due on current obligations covered by IMF assistance averages 26% from 2001-2008. Rescheduling of debt and buyback of loans On December 7, 2000, the Board of Directors approved management s proposal to allocate $US20 million in terms from CAF s net income to cover part of its cost with the remainder to be covered by donor countries. Approval of required distribution of net income for this purpose by CAF s shareholder assembly obtained in March 2001. Similar annual approvals will be required through 2005. US$5 million in nominal terms were disbursed in 2002. IMF Board approved Bolivia s enhanced assistance on Fully implemented. Up to 100% debt service relief until target is achieved. Relief will be provided from the completion point through 2004. Board approved enhanced HIPC relief in December 2000. Restructuring of debt. Confirmation by Governing Board to participate in the enhanced HIPC Initiative in June 2000. Restructuring agreed and relief delivered on September 1,2002. 100 percent debt-service relief at completion point covered by the HIPC Trust Fund which NDF uses as its main vehicle to provide the debt relief. Board resolution on NDF debt relief to Bolivia of US$O.75 million approved in December 2000. Letter faxed on February 26,2001, confirmed that 100% of relief was delivered to the HIPC Trust Fund in March 2001. I/ For all retroactive cases, end-1998 is the reference date under the Enhanced HIPC Initiative for calendar-based countries (except for Burkina Faso which uses end-l 999 data). Fiscal-year-based countries use end-june 1999 data. (DP document for Bolivia is dated January 14,200O) 2/ Share is of debt after original HIPC. 3/ Before original HIPC. 4/ After original HIPC. 5/ The amount of assistance is estimated using the exchange rates at the decision point.