New IMF loans for Cote d'Ivoire
The Heavily Indebted Poor Countries (HIPC) initiative is run by the IMF and World Bank and provides partial debt relief for some low income countries. So far 32 countries have had some debts cancelled through the scheme.
Cote d’Ivoire was progressing through its HIPC program until the post-election violence at the end of 2010 led the IMF and World Bank to suspend their support.
In 2009 the World Bank and IMF had estimated that Cote d’Ivoire’s debt would fall from US$9 billion to US$4 billion on completion of their HIPC program, though this would still leave the country paying 10-20% of government revenue on debt repayments over the next decade; a substantial proportion of revenue when so much domestic investment in health and education is necessary to alleviate poverty.
In May a team from the IMF went to Cote d’Ivoire and assessed the country to be unable to meet their external debt repayments due this year and proposed a new loan of US$130 million. The Executive Board has now approved this loan under the Rapid Credit Facility. Even though the loan is being given to pay old debts it would not be cancelled on completion of the HIPC program. Cote d’Ivoire also owes the UK’s Export Credit Guarantee Department (ECGD) £21 million, which was due to be cancelled if and when it completes the HIPC program.
Cote d’Ivoire’s external debt is now much larger than the IMF’s 2009 estimation. Although this is largely a result of unforeseen political turmoil, the subsequent suspension of the HIPC program, the additional debt to the IMF and the continuing existence of the ECGD debt will only exacerbate an already fragile economy and will be a greater obstacle in overcoming the social issues this turmoil has created.