Moving beyond the neutral effects in HIPC Debt Relief to achieve real savings for post-conflict economic recovery: the experience of the Central African Republic

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Viewpoint by Bécaye DIARRA, Economics Advisor, UNDP Bangui, C.A.R

Is reaching HIPC Debt relief enough for triggering economic recovery? The announcement that the C.A.R. has reached the HIPC completion point and will as a result benefit from debt forgiveness of US$ 578 million has been celebrated in official ceremonies, fuelled national enthusiasm and even found resonance in prayers in its churches and mosques. C.A.R. became the 25th country to reach the completion point. Moreover, the country will benefit from US$ 185 million in additional relief of its multilateral debt1 from IMF, IDA and the African Development Fund. While these achievements are a step in the right direction, it is important to assess their likely impact within the post-conflict context of the C.A.R. .

The aim of this brief is first to analyze the effect of debt forgiveness under the HIPC programme and second to look at how to manage the "post-completion" phase in order to maximize the resulting economic benefits.