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Essay APC2602 - Political Economy Of Africa Essay Political Economy Of Africa Essay APC2602 - Political Economy Of Africa
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Multilateral Debt Relief Initiative (MDRI) – IMF FactsheetWhat is the MDRI?
The MDRI provides 100% debt cancellation for heavily indebted poor countries. The
Group of 8 (Canada, France, Germany, Italy, Japan, Russia, the UK and the United
States of America), suggested that the IMF, World Bank and African Development
Fund (ADF) create a separate fund and cancel IMF debt for countries that are
eligible so that they can work towards their MDGs.
Who is eligible?
Countries must have a per capita below $380
Show satisfactory progress that countries are paying off their debts
Have satisfactory performance in macroeconomic policies, implement a poverty
reduction strategy, and have public expenditure management.
All countries will be treated equally/uniformly and it depends on the countries’
institutions that have applied to comply.
The IMF and the World Bank will cooperate closely in the implementation and
monitoring.
The G8’s Multilateral Debt Relief Initiative (MDRI) and Poverty Reduction in Sub-
Saharan Africa
1. Origins of Africa’s debt burden
Since the 1970s, Africa’s debt levels have risen. Few African countries had access to
private capital markets and all borrowing was from official sources (bilateral and
multilateral). Loans were provided in an unsustainable manner, at very low fixed
rates and long grace periods not needing servicing. Rising debt was also attributed
to slow economic growth and slow export growth. Loans were provided on soft terms
and so countries were still unable to repay their loans because the growth was never
generated effectively.
2. Past Debt Relief
There have been several initiative instituted such as the Paris Club and the Heavily
Indebted Poor Countries (HIPC) initiative, however both had substantial issues.
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