Table of Contents

  • One of the key Commonwealth concerns since the early 1980s has been the debt problem facing poor countries. Over time, the Commonwealth has made a number of proposals which have contributed to the various debt reduction initiatives of the Paris Club and the launching of the Heavily Indebted Poor Countries (HIPC) Initiative in 1996 and its enhancement in 1999. Following the Commonwealth Finance Ministers Meeting in Malta in 2000, a forum, comprising mainly of Commonwealth HIPCs, was established to provide regular input into the shaping of the HIPC Initiative.

  • The number of countries which have reached decision point under the HIPC Initiative remains at 27, of which 14 have reached completion point, with Ethiopia, Ghana and Senegal as the most recent additions. The process of reaching completion point has generally taken longer than envisaged for three reasons: the time taken to prepare a full Poverty Reduction Strategy Paper (PRSP) and its satisfactorily implementation for at least one year; the delay in implementing the Poverty Reduction and Growth Facility (PRGF) programmes; and the need to satisfy social and structural triggers. The first reason is now mainly of historical significance as 12 of the 16 Interim HIPCs have actually completed their PRSPs, eight of which have already been implementing them for more than one year.

  • There has been no change since the September 2003 Meeting of the Commonwealth HIPC Ministerial Forum in the number of countries that have reached decision point under the Initiative. There are still 27 decision point countries, of which 14 have reached completion point (hereinafter also referred to as HIPC graduates), with Ethiopia, Ghana and Senegal the recent graduates (Table 1.1). Thirteen decision point HIPCs (referred to as Interim HIPCs) have yet to reach completion point.

  • The short- to medium-term economic prospects of HIPCs are crucially dependent on developments in the major economies of the world, which are their main markets, on prospects for both oil and non-oil commodity prices and on how much external financing is available, especially in the form of aid and debt relief. In the world economy, some developing countries and regions are also becoming important locomotives for growth and these developments also have a bearing on the prospects for some HIPCs. In addition, as most HIPCs are also heavily dependent on agriculture, weather plays an important role in their performance, as does the incidence of conflict which can disrupt production.

  • In the paper prepared for the Dar es Salaam meeting of the Commonwealth HIPC Ministerial Forum in February 2003, it was pointed out that the HIPC Initiative was not designed to help countries maintain long-term debt sustainability beyond the completion point and that four issues need to be addressed in this context.

  • One of the reasons for the relatively poor performance of the sub-Saharan African economies and, to a lesser degree, those of Latin America has been relatively low rates of investment compared to those in Asia and other regions of the world. In east Asia and the Pacific gross domestic investment as a proportion of GDP was close to an average of 29 per cent in 1991–2000 and it has continued to climb since then and is expected to be around 35 per cent of GDP in 2005. Although it will probably ease somewhat, high rates of over 30 per cent are expected to continue over the decade 2006–2015.