A/HRC/23/37 the IMF advises these countries to “pursue cautious borrowing policies and strengthen their public debt management” if they are to reduce their debt vulnerabilities “decisively.” 17 21. Are the debt reductions under the initiatives enduring? The available evidence suggests that they may not be. According to a 2008 study of 16 post-completion point HIPCs, on average, the net present value of external debt service relative to average exports for these countries, assuming the provision of relief in 2004 under MDRI, was expected to increase from an initial ratio of 22 per cent in 2004 to 176 per cent in 2015, rising to a peak of 242 per cent in 2026.18 In March 2009, IMF reported that the debt-to-GDP ratios of 28 low-income countries exceeded 60 per cent19 – twice the debt sustainability threshold set by IMF and the World Bank for countries with weak institutions. In 2011, the two institutions reported that “a third of low-income countries [were] either in debt distress or at high risk of debt distress” and that “a quarter of the post-completion point HIPCs” were at “high risk of debt distress.”20 A more recent IMF and World Bank assessment indicates that although none of the post-completion point HIPCs is currently considered in debt distress, one fifth (7 countries) are at high risk of debt distress. 22. Moreover, the HIPC Initiative aims to bring the net present value of the debt/export ratio to below the 150 per cent threshold, but at least 13 HIPCs had a higher ratio at completion point, with two (Gambia and Uganda) having ratios higher than at decision point.21 Yet others have seen their debt indicators deteriorate after receiving debt relief. For example, Uganda’s ratio swelled to over 300 per cent within three years after reaching its HIPC Initiative completion point. According to a June 2012 debt sustainability analysis, debt relief under the initiatives reduced Tanzania’s debt burden to 20.6 per cent of GDP at end-June 2007.22 Nevertheless, by end-June 2011, the country’s external debt had risen to 34.7 per cent of GDP. It is notable that the assessment refers only to central government debt but acknowledges that “contingent risk from debt by other state-owned enterprises and pension funds could be sizable.” In the case of Haiti, the external debt burden has reduced, but the country’s narrow export base poses a problem for debt sustainability.23 In particular, Haiti remains at high risk of debt distress. 23. An issue of further concern is that substantial borrowing on the international capital markets has raised public debt-to-GDP levels of some HIPCs to pre-relief points. The impact will depend on whether the new borrowing translates into productive investment and growth. 17 18 19 20 21 22 23 8 IMF, “Debt Relief Under the Heavily Indebted Poor Countries (HIPC) Initiative”, Factsheet (2 April 2013), available from www.imf.org/external/np/exr/facts/hipc.htm. Jacinta Nwachukwu, “The Prospects for Foreign Debt Sustainability in Post-Completion Point Countries: Implications of the HIPC-MDRI Framework,” Working Paper No. 26 (Manchester, Brooks World Poverty Institute, University of Manchester, February 2008), p. 12. IMF, The Implications of the Global Financial Crisis for Low-Income Countries, March 2009, available from www.imf.org/external/pubs/ft/books/2009/globalfin/globalfin.pdf. IDA and IMF, “Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI) – Status of Implementation and Proposals for the Future of the HIPC Initiative,” 8 November 2011. Benin (216%), Burkina Faso (208.7%), Ethiopia (218.4%), Gambia (242 %), Ghana (152%), Malawi (229.1%), Mauritania (256%), Niger (208.7%), Rwanda (326.5%), Senegal (154%), Sierra Leone (202.3%), Uganda (258%) and Zambia (174%). IDA and IMF, “United Republic of Tanzania: Joint World Bank/IMF Debt Sustainability Analysis”, 22 June 2012, p. 2. IMF and IDA, “Haiti: Joint Bank-Fund Staff Debt Sustainability Analysis 2012”, 23 February 2012, pp. 1-2 and 9.