Oil Sector Reform Earns Congo Full IMF, World Bank Debt Relief
ngrclimatereports January 29th, 2010
By Etim Imisim (Abuja)
Improvement in oil sector management was among reasons the International Development Association, a good will arm of the World Bank offering concessionary loans to poor countries, and the International Monetary Fund gave full debt relief of US$1.9 billion for the Republic of Congo.
Announced today, the boards of the bank and fund approved the decision under the Enhanced Heavily Indebted Poor Countries and the Multilateral Debt Relief initiatives.
Marie-Françoise Marie-Nell, World Bank director for the Congo said the country successfully undertook “major and difficult reforms” and in the process improved social outcomes for the people. She hoped authorities there would use the debt relief proceeds and the significant progress made in fiscal and economic management to diversify the economy and improve competitiveness.
Robert York, IMF Mission Chief for Congo, noted that conditions for Congo to qualify were quite high and that they were set to encourage transparency in the management of oil resources, better governance and public expenditures as well as firm up public financial management and combat corruption.
In a related development, Reuters/Factiva reported this week that Congo’s parliament approved spending limits in the 2010 budget on Saturday that were demanded by President Joseph Kabila to try to ensure the country qualifies for more debt relief.
Of the total US$1.9 billion the country’s debt relief is expected to generate, US$1.7 billion will come from HIPC and US$201.3 million from MDRI. HIPC is a framework run by the bank and the fund for various creditors to work towards debtor nations’ exit.
It will be recalled that when HIPC was initiated in 1996 with little or no input from debtor nations for which it was designed, the two lending institutions were criticized for constituting themselves into accusers and trial judges in their own case. This and other observations led to the modification of the initiative in 1999 when external debt thresholds were lowered, a number of creditors introduced interim debt relief, and national government were to tie resources freed under the initiative to poverty reduction.
MDRI is separate from HIPC and is an outcome of the 2005 G8 Summit in Gleneagles when the rich nations’ club pledged relief for the most indebted countries, and pool additional resources to help in the attainment of the Millennium Development Goals (MDGs). Most of the countries were African and, amounting to $55 billion, the pledge represented only one-sixth of total indebtedness of African countries to Paris Club and multilateral lending institutions.
Nigeria’s fairly large share of $18 billion came from that pledge.
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