Multilateral Debt Relief Initiative
Multilateral Debt Relief Initiative was approved in June 2005 by the finance ministers of the G8 during the 31st G8 Summit, held at Gleneagles, Scotland. MDRI is different to HIPC, but operationally related. Countries in the termination point get full relief of their debt with IMF, International Development Association and the African Development Bank. MDRI was approved for encouraging debtor countries to continue their political reforms. For reasons of equal treatment of Low Income Countries the relieved debts were counted when new ancillary remedies were guaranteed by IDA and AfDB. G8 members committed themselves to compensate IDA and AfDB refluxes with further remedies. These compensations will be shared among IDA and AfDB beneficiary countries according to the efforts they make.
How it works
IMF, IDA and AfDB fully relieve the debt of countries which attain termination point—the step where a country is eligible to receive total and irrevocable relief of its debt—in HIPC's frame.The difference with HIPC consists of MDRI not covering all creditors, only IMF, IDA and AfDB. Besides, under MDRI, IMF also provided debt relief to non-HIPC countries whose per capita income did not exceed $380 and were indebted with IMF until the end of 2004. Thus a uniform treatment in IMF resources management is guaranteed.