HIPC Initiative: Austria contributes to debt relief for Somalia and Sudan 14.9 million euros pledged
Finance Minister Magnus Brunner and Managing Director of the IMF, Kristalina Georgiewa, signed the agreement
The corona pandemic has brought many emerging and developing countries even further into financial difficulties. As early as 2020, the International Monetary Fund (IMF) decided to cancel Somalia's debt as part of the HIPC (Heavily Indebted Poor Countries) initiative. The same followed in 2021 for Sudan. Funding comes from voluntary contributions from IMF member countries. Austria is now providing a contribution of 14.9 million euros. Finance Minister Magnus Brunner and IMF Managing Director Kristalina Georgieva signed an agreement to this effect.
Austrian Finance Minister Magnus Brunner commented: “Debt crises through to state bankruptcies are not only a threat to the world economy, they cause mass poverty and misery in the highly indebted countries. We are now giving back 100% of the reserves previously distributed by the IMF to the countries that need it most. We want to make a contribution to poverty reduction so that Somalia and Sudan no longer have to spend scarce budget funds to service their debts, but instead have them available to support education, health facilities or rural development measures and basic infrastructure.”
Debt relief after meeting certain criteria
In 1996, the HIPC Initiative was launched by the IMF and the World Bank to ensure that no poor country has an unmanageable debt burden. Under the initiative, countries go through a step-by-step process in which they meet criteria, commit to poverty reduction through policy change, and demonstrate progress.
For the purpose of debt relief, the IMF had distributed to the member states proportionately those provisions that had been created as part of the financial assistance programs in favour of Somalia and Sudan. In this context, Austria received a total of 14,851,534.96 euros. These funds are now being returned to the IMF to finance debt relief.