Press Release

OPEC Fund extends debt relief to Honduras under Enhanced HIPC Initiative

38/2005 April 21, 2005, Vienna, Austria

The OPEC Fund for International Development today signed an agreement with the Republic of Honduras for the provision of debt relief within the framework of the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative.

Endorsed by the Interim and Development Committees of the World Bank and the International Monetary Fund in September 1996, the Initiative represents a unified effort by the international community to address the external debt problems of the world’s heavily indebted poor countries. Specifically, it aims to reduce the debt of eligible countries to sustainable levels (subject to satisfactory policy performance) in order to ensure that adjustment and reform efforts are not put at risk by continued high debt and debt service burdens. As the Initiative requires participation by all relevant creditors, debt relief efforts entail coordinated actions by the international finance community, including multilateral institutions.

The OPEC Fund has, from the very beginning, expressed its support of the HIPC Initiative and participated actively in its design. Under the Initiative, the Fund has approved debt relief to 22 countries, 18 of which are in Africa and four in Latin America.

In July 2000, support to a comprehensive debt reduction package for Honduras was agreed upon by the IMF and the World Bank. The package is expected to save the country around US$900 million in debt service over the coming years. In present value (PV) terms, the package is equal to US$556 million. This assistance will help Honduras cope with its external debt burden and reduce the strain on national budgetary resources, thus freeing up resources to accelerate structural reforms and finance needed social programs.

The OPEC Fund has been involved in development activities in Honduras for over two decades, providing balance of payments support and assisting projects in the sectors of energy, agriculture, health, transportation and water supply and sewerage, among others. The country has also benefited from technical assistance grants as well as an emergency grant to help hurricane victims. Under today’s agreement, financing in the amount of US$9.6 million will be made available to ease Honduras’s debt burden.

The agreement was signed in Vienna, by H.E. Mr. Ralph Oberholzer, Vice Minister of Credit and Public Investment of the Republic of Honduras, and by H.E. Mr. Jamal Nasser Lootah, Chairman of the Governing Board of the OPEC Fund.