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afrol News, 15 April - The World Bank's International Development Association (IDA) and the International Monetary Fund (IMF) agreed last week that Burkina Faso has taken the steps necessary to reach its completion point under the enhanced framework of the Heavily Indebted Poor Countries (HIPC) Initiative. Burkina Faso becomes the fifth country to reach this point. - The Heavily Indebted Poor Countries (HIPC) provides comprehensive debt relief to the world's poorest, most heavily indebted countries, according to the World Bank. Launched by the World Bank and IMF in 1996, it removes the debt overhang for countries pursuing economic and social reform targeted at measurable poverty reduction, reducing multilateral debt, and helping countries exit from endless debt restructuring. Debt relief under the enhanced HIPC Initiative from all of Burkina Faso's creditors amounts to US$ 195 million in net present value (NPV) terms. This comes in addition to US$ 229 million in NPV terms the country received when it reached its completion point under the original HIPC framework in July 2000. Although this relief cuts its debt stock by nearly 50 percent, exogenous factors have adversely affected Burkina Faso's export performance and capacity, raising the NPV of debt to export ratio at completion point substantially above the 150 percent target set out under the enhanced HIPC framework, the World Bank observes. "Despite prudent policy responses, Burkina Faso would not be able to exit from external debt rescheduling, a key objective of the HIPC Initiative." In light of this, and as provided for under the HIPC Initiative, the Boards of the IMF and World Bank agreed that Burkina Faso would require exceptional debt relief, or "topping-up," to achieve debt sustainability, and endorsed an additional US$ 129 million in NPV terms of debt relief to mitigate the adverse effect on Burkina Faso's debt ratios resulting from exogenous shocks to its exports. These factors included falling world cotton prices - resulting in part to heavy subsidies in industrialized country markets - political and economic events in neighbouring countries, and crop damage due to agricultural parasites. With this additional treatment, the total nominal debt service relief provided under the HIPC Initiative equals about US$ 930 million. Burkina Faso is situated at the heart of the Sahel, bordering Benin, Togo, Ghana and Côte d'Ivoire in the South, Mali in the North-West, and Niger in the East. In contrast to its southern neighbours, Burkina is poorly endowed with natural resources, has very limited rainfall - averaging about 350 mm in the north and 1000 mm in the south-west - and no coastal access. Since independence in 1960, Burkina has remained one of the poorest countries in the world and ranked only 171 out of 174 countries in the UN Development Program's (UNDP) 1999 Human Development Index. The population was estimated at 11.6 million in 1999, with a population growth rate of 2.8 percent per year. Social indicators are very low: 45 percent of the population below the poverty line, life expectancy at birth of 44 years, 99 per 1000 infant mortality, and 40 percent gross primary school enrolment. Social advances have however been reached under the Burkinabe Poverty Reduction Strategy over the last years. Enrolment rates for girls and primary school registration has increased markedly, school infrastructure building efforts proved effective and a plan to reform the hiring and retention of teachers has been launched. Health policies also made progress, especially in raising immunisation coverage rates, ensuring a good supply of essential drugs, and improving staffing of primary health facilities. Sources: Based on World Bank and
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