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Multilateral Debt Relief Initiative Implementation Modalities at the African Development Fund MDBs Meeting on Debt Issue

Multilateral Debt Relief Initiative Implementation Modalities at the African Development Fund MDBs Meeting on Debt Issues Washington, DC 21-22 June 2006. Outline. I. Key Features and Scope of M DRI at AfDF II. Implementation Arrangements III. Financing and Monitoring Arrangements

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Multilateral Debt Relief Initiative Implementation Modalities at the African Development Fund MDBs Meeting on Debt Issue

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  1. Multilateral Debt Relief InitiativeImplementationModalitiesat theAfrican Development FundMDBs Meeting on Debt IssuesWashington, DC21-22June 2006

  2. Outline I. Key Features and Scope of MDRI at AfDF II. Implementation Arrangements III. Financing and Monitoring Arrangements IV. Timetable for MDRI Implementation at AfDF

  3. Key Features • G8 Proposal (MDRI): cancel 100 percent of debt owed by post-completion point HIPCs to ADF, IDA and IMF to support countries’ efforts to reach the MDGs • 42 Eligible HIPCs worldwide of which 33 are AfDF Regional Member Countries (RMCs) • Donors committed to providing additional resources to compensate for forgone credit reflows • Compensatory replacement funds“dollar for dollar” to be reallocated to all AfDF-only countries, including non-HIPCs

  4. Scope of MDRI at AfDF • Key Dates & Debt Coverage • Cut-off date: December 31, 2004 • Implementation date: January 1, 2006 • Debt coverage: Debt outstanding and disbursed (DOD) • Country Coverage: 33 RMCs, of which • 14 completion point HIPCs • 10 post-decision point HIPCs • 8 pre-decision point HIPCs • 1 Sunset clause country

  5. Implementation Arrangements • Eligibility Criteria for Completion Point Countries • Satisfactory macro-economic performance under IMF-PRGF • Satisfactory implementation of poverty reduction strategy • Adequate public expenditure management system, including minimum standards of governance and transparency • Eligibility Criteria for Post-Decision and Pre-Decision Point Countries • For 10 post-decision and 8 pre-decision point countries, reaching completion point - sufficient for MDRI eligibility

  6. Estimated Cost of MDRI at AfDF Estimated Cost: UA 5.84 billion = US$ 8.54 billion at ADF-X exchange rate (UA1.0 = US$ 1.463498) (Cost in UA Million)

  7. III. Financing and Monitoring Arrangements • Financing Arrangements • Status of Donor Indicative Pledges for ADF • Effectiveness and Indicative Donor Commitments • Monitoring Arrangements and Voting Rights

  8. Financing Arrangements • Compensatory donor resources Donors committed to preserve ADF financing capacity by providing additional resources to compensate for forgone credit reflows • Secured Financing required over three periods 2006 – 2007 (Remaining ADF – X period):Unqualified commitments 2008 – 2015 (Remainder of first decade): Mostly unqualified, some qualified commitments 2016 – 2054 (Subsequent four decades): Mostly qualified commitments, some unqualified commitments

  9. Status of Donor Indicative Pledges for AfDF

  10. EffectivenessTriggers and Indicative Commitments • UA 3.91 billion: 70% of qualified and unqualified commitments for 14 CP countries(110.3% of ADF cost) • UA 84.82 million: 90% of unqualified commitments for financing MDRI in ADF-X period (2006 – 2007)(92.2% of ADF cost) • UA 5.84 billion: 70% of qualified & unqualified commitments for financing 33 eligible countries over entire MDRI period(73.9% of ADF cost) (Indicative commitments as at mid-June 2006 in brackets)

  11. Monitoring Arrangements and Voting Rights • Compensatory Funds from Donorsto ADF • Contribution to the MDRI will be recorded and monitored separately from regular ADF replenishment contributions • Monitoring Arrangements • Donor Contributions to finance the MDRI • Beneficiary countries use of resources for poverty reduction • Voting Rights • Additional voting rights for ADF State participants’ contributions for MDRI – approved by BoG Resolution

  12. V. Timetable for MDRI Implementation by ADF • 19 April 2006: MDRI Approval byBG Boards of Directors • ADF MDRI Implementation Modalities Paper • Final ADF Deputies Report (including BoG Resolution) • Country Eligibility Assessments • 18 May 2006:Board of Governors Resolution approved by 89.2% of total voting power (85.0% required) • 30 June 2006: 2006 ADF country allocations ready fornetting out MDRI debt relief – harmonization of CPIA & DSF rankings w/IDA • 30 June 2006:Deadline forSubmission of IoCs by donors – to satisfy Effectiveness Triggers • July 2006:Retroactive effectiveness of MDRI as of 1st January 2006, with actual benefits provided to eligible countries, subject to date effectiveness triggers satisfied

  13. End of Presentation Thank you for your attention

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