The Government will make a new contribution to assist the world's poorest nations to escape the burden of unsustainable debt by providing an extra $18 million to the Heavily Indebted Poor Countries (HIPC) Initiative.
The HIPC Initiative is a multilateral plan to provide debt relief to the world's poorest countries who are pursuing IMF and World Bank supported reform programmes. The additional funding is aimed at meeting the ongoing costs of providing multilateral debt relief to these countries.
This contribution is in addition to the Government's commitment to provide 100 per cent bilateral debt relief for countries that qualify for HIPC assistance. Of those countries identified for possible debt relief under the Initiative, both of the HIPC-eligible countries with bilateral debts to Australia - Nicaragua and Ethiopia - are already benefiting from HIPC assistance and are no longer repaying their debts to Australia.
Australia believes the enhanced HIPC Initiative is the most effective way to provide sustainable debt relief to the world's poorest countries. It involves all creditors, including multilateral development institutions, giving debt relief to countries with sound institutional and policy frameworks to aid further development. It is also directed to ensuring that the proceeds of debt relief are directed towards basic health, education and poverty reduction programmes, and not lost in corruption or military spending.
This contribution meets Australia's share of the continuing costs of the HIPC Initiative, and brings Australia's total commitment to the HIPC Initiative to $77 million.