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Good news! The IMF has finally moved forward on Liberian debt relief. Yesterday's IMF announcement that it has agreed on the necessary financing was a strong endorsement by the international community of Liberia's progress under its new government. It took more than a year of pushing and prodding, but Liberia now can formally begin the debt relief process.
But this is just the beginning. The IMF has not forgiven Liberia's debts, but rather committed the financing necessary so that Liberia can begin the HIPC debt relief process. With any luck, Liberia can move to a HIPC Decision Point (under which it would receive "interim" relief) sometime in the next couple of months, and then to Completion Point (the final step of the debt relief process) perhaps in 2009.
This complicated process is aimed simply at recognizing the obvious -- that today's Liberians should not be expected to repay loans that the IMF and others made to the government of the dictator Samuel Doe 25 years ago, and which have been accumulating interest ever since.
Liberia has had a tougher road than other HIPC countries. It is the only HIPC country so far that has had to wait for the IMF to secure financing, because it was explicitly excluded from the 1999 HIPC financing arrangements that covered other countries. The extra step delayed the start of the HIPC process for the better part of a year.
Public action through press reports and letters to the IMF help push the process forward. (Kudos to all of you that lent a hand to the process!) The IMF staff worked hard throughout the process, but the public push gave the impetus to member countries, the Board, and senior management to get the deal done. There is still a long way to go, but this is a big step forward in the process.
The World Bank also issued a press release yesterday in which president Bob Zoellick welcomed the IMF's decision.