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World Bank lowers Tanzania’s foreign debt burden
2006-03-30 07:50:22
By Pacifique Nkeshimana
Tanzania is among the countries to benefit from the World Bank’s US$37bn/- Multilateral Debt Relief Initiative, it was announced yesterday.
The World Bank’s board of executive directors approved the financing and implementation details for the bank’s contribution towards the multilateral Debt Relief Initiative (MDRI) on Tuesday.
The statement made available to The Guardian yesterday said that WB will cancel the International Development Association (IDA) dept of some of the world’s poorest countries starting from July 1, the date of the bank’s new fiscal year.
IDA is expected to provide more than US$37 billion in debt relief over 40 years.
”This is a historic agreement combining increased financing with debt relief that will help poor countries to meet their Millennium Development Goals (MDGs),’’ the statement said while quoting Paul Wolfowitz, the WB president.
Wolfowitz said that he was particularly pleased that the Bank’s shareholders had agreed on a funding package that will help to preserve the IDA’s role as the cornerstone in development finance for the poor countries.
’’The International Development Association board of governors is now expected to consider and vote on the resolution of approval, which Wolfowitz said should be executed quickly to ensure debt cancellation can be implemented (in the first half the new fiscal year),’’ the statement read.
At the July last year’s G8 summit at Gleneagles in Scotland, G8 leaders pledged to cancel the debts of the world’s highly indebted poor countries, most of which are African.
IDA of the WB, the International Monetary Fund (IMF) and the African Development Fund will cancel the debts of the countries that have reached the completion point of the Enhanced Heavily Indebted Poor countries (HIPC) initiative.
The Bank said that initially Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Honduras, Madagascar, Mali, Mozambique, Nicaragua and Niger will be eligible for 100 per cent debt cancellation.
Other HIPCs to benefit from this 100 per cent debt cancellation are Tanzania, Rwanda, Senegal, Uganda, Guyana and Zambia.
According to WB, Mauritania has completed the HIPC programme but will qualify for relief after implementing key public expenditure management reforms.
However, the remaining HIPCs will be eligible for debt cancellation once they will have completed the requirements of the HIPC initiative.
’’Donors have agreed to a financing package that calls for additional donor contributions over time to ensure delivery of fresh resources for poverty reduction,’’ the statement said.
It added that the compensatory financing over the duration of the cancelled loans will be based on strong indicative pledges already made and donors are undertaking the necessary steps in their countries to provide their financing commitments.
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