A/HRC/23/37 I. Introduction 1. There are currently two main international debt relief initiatives aiming at reducing the external debt burdens of low-income countries: the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI).1 2. The HIPC Initiative was launched in 1996 by IMF and the World Bank with the aim of reducing the external debt burdens of the most heavily indebted poor countries to a level deemed “sustainable” by the two institutions. In 1999, it was comprehensively reviewed in order to provide more substantial debt relief and to strengthen the links between debt relief, poverty reduction and social policies. 3. In 2005, the Enhanced HIPC Initiative was supplemented by MDRI, which was designed to further reduce the debt of HIPCs and provide resources for the attainment of the Millennium Development Goals. Under MDRI, the International Development Association (IDA), IMF, the African Development Fund (ADF) and the Inter-American Development Bank (IDB) provide 100 per cent debt relief on eligible debts (i.e., loans disbursed by IMF, ADF and IDB by end-December 2003, and those disbursed by IDA by end-December 2003 and still outstanding after HIPC Initiative debt relief).2 4. As of March 2013, 35 of the 39 countries that have been assessed eligible or potentially eligible under the HIPC Initiative had reached the completion point,3 one country (Chad) was in the interim phase of the Initiative while three pre-decision point countries – Eritrea, Somalia and Sudan – had yet to start the process of qualifying for debt relief under the Initiative. 4 5. According to the World Bank and IMF, the two international debt relief initiatives have helped significantly reduce the external debt burden of HIPCs and enabled these countries to scale up poverty-reducing expenditure. The present report assesses the impact of the initiatives on poverty reduction, development and human rights. II. Understanding debt relief What is “debt relief”? A. 6. The presentation of debt relief under the current international initiatives as a key source of funding for poverty reduction has, together with the largely unclear nature of debt relief, led to high expectations as regards the impact of debt relief. 1 2 3 4 4 For an overview of debt relief efforts for low-income countries, see Boris Gamarra, Malvina Pollock and Carlos A. Primo Braga, “Debt Relief to Low-Income Countries: A Retrospective” in Carlos A. Primo Braga and Dörte Dömeland (eds.) Debt Relief and Beyond: Lessons Learned and Challenges Ahead (Washington, D.C., World Bank, 2009), pp. 11-33. In the case of IMF, non-HIPCs with per capita income below $380 are also eligible. Afghanistan, Benin, Bolivia (Plurinational State of), Burkina Faso, Burundi, Cameroon, Central African Republic, Comoros, Congo, Cote d’Ivoire, Democratic Republic of the Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Haiti, Honduras, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Togo, Uganda, United Republic of Tanzania and Zambia. International Development Association (IDA) and International Monetary Fund (IMF), “Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI)”, Statistical Update (25 March 2013).