The HIPC Initiative and Debt Relief: An Examination of Issues Relevant to Nepal

Set up in 1996, the HIPC Initiative's prime goal was to reduce eligible countries' debt burdens to the thresholds established under the Initiative. In September 1999, the HIPC Initiative was enhanced in order to provide broader, deeper and faster debt relief. There are both costs and benefits associated with participation under the Initiative. At the completion point, full debt cancellation under the MDRI is granted. Nepal has been found to be satisfying all the conditions required to reach the decision point under the Enhanced HIPC Initiative framework. The possible conditions attached to Nepal's entry to the HIPC Initiative, the level of existing concessionary foreign assistance that can be nonconcessionary, the reform measures that need to be additionally implemented and the possible debt situation after reaching the completion point of the HIPC Initiative are some of the issues that need further attention.