[Ghana - Aid] Ghana To Receive US$4.429 Billion Total Debt Relief

from Hertiage News

Benjamin K. Arthur

GHANA will receive US$4.429 billion, being the total amount of additional International Development Association (IDA) debt relief, provided under the Multilateral Debt Relief Initiative (MDRI) and the IDA portion of debt relief, already committed under the Heavily Indebted Poor Countries Initiative (HIPC).

This follows the cancellation by the World Bank of the International Development Association (IDA) debt of Ghana under the Multilateral Debt Relief Initiative (MDRI), a release issued in Accra has stated. “We have secured a level of financing commitments from donors that allows us to begin implementing the Multilateral Debt Relief Initiative,” said World Bank President Paul Wolfowitz. “Additional debt relief will help Ghana channel resources into programs that directly help the people who need it most - the poor who need and deserve a better education, better health services, greater access to clean water, and greater opportunities to escape poverty.”

Countries that have “graduated” - called reaching the completion point - from the HIPC Initiative are eligible for additional debt relief under the MDRI. Ghana will receive estimated MDRI relief in the amount of US$2.983 billion, which is in addition to the US$1.446 billion in IDA debt relief committed under the HIPC initiative.

A main objective of the MDRI is to provide additional support to HIPCs to reach the MDGs. Since graduating from the HIPC Initiative, Ghana has made noticeable progress in several key areas. The poverty headcount has declined 7 percentage points since 1997, reaching 35 in 2003. Current projections suggest that Ghana should reach the MDGs of halving the 1990 poverty rate before 2015.

To support this positive trend, total poverty-related spending has risen during the past several years, reaching 8.5 percent of GDP by end-2005. Improvements in the delivery of human services are reported in several fronts. The share of supervised maternal deliveries rose to 54 percent by 2005, up from 49 percent in 2002, with markedincreases in the deprived regions (Central, Northern, Upper East and Upper West regions).

There have also been increases in gross primary enrollment rates (GPER), with the national GPER reaching 92 percent at the end of the 2005/06 academic year, up from 81 percent in 2003. Lastly, there was a further decline in the HIV/AIDS prevalence rate among pregnant women, dropping to 3.1 percent in early 2006, down from 3.6 percent in 2003.

Carlos Cavalcanti, the World Bank’s Lead Economist for Ghana notes, “The MDRI is a strong vote of confidence in Ghana’s ability to stay on track toward the MDGs by further increasing poverty-related spending and strengthening the links between the country’s many poverty related interventions. These synergies are particularly needed in the case of interventions in health and nutrition, aimed at reducing further infant and under 5 mortality rates.”

The Multilateral Debt Relief Initiative (MDRI), which will cancel the International Development Association (IDA) debt of some of the world’s poorest countries, will take effect on July 1, 2006. Under the MDRI, IDA is expected to provide some US$37 billion in debt relief over 40 years. This is in addition to some US$17 billion of debt relief already committed by IDA under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative.

Initially, 19 countries will receive 100 percent cancellation of their eligible debt: Benin, Bolivia, Burkina Faso, Cameroon, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia. The remaining HIPC countries (see HIPC Web Site) will be eligible for debt cancellation once they have completed the requirements of the HIPC Initiative.