IMF grants Gambia milestone debt relief package

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21 December 2007

WASHINGTON (Reuters) - Gambia, one of the world's poorest countries, has qualified for crucial debt relief that will save Africa's smallest country a fortune in interest payments, the International Monetary Fund said on Thursday.

The IMF said in a statement the West African nation had made sufficient progress in strengthening tools to boost growth and combat poverty and had reached a 'completion point' under the Heavily Indebted Poor Countries (HIPC) initiative.

Debt relief under HIPC is worth $140 million in nominal terms, or $66.6 million when taken at net present value. But more importantly, reaching the so-called completion point makes Gambia eligible for broader assistance that will push the total value of its debt relief to $514 million, the IMF said.

'Gambia has made good progress toward securing macroeconomic stability and has established a good track record of policy implementation in 2007,' said Tsidi Tsikata, IMF mission chief for Gambia.

'Gambia must take this opportunity to ensure that future borrowing is prudently managed in order to prevent a reoccurrence of debt distress, and to continue implementing reforms,' he said in the statement.

The wider measure, called the Multilateral Debt Relief Initiative (MDRI), was agreed at the Group of Eight summit in Gleneagles, Scotland, in July 2005 and includes the World Bank and the African Development Bank, as well as the IMF.

For Gambia, the World Bank will cancel $183 million of pre-2003 debt, for a savings of $202 million in debt payments.

Total debt service savings for Gambia under the MDRI add up to around $374 million over the next 43 years, the IMF said.

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