The HIPC initiative: Debt relief subject to conditions

In 1996, the World Bank and the International Monetary Fund (IMF) began an extensive initiative to reduce the external debt burden of the heavily indebted poor countries (HIPCs) – known as the "debt relief initiative" or "HIPC initiative". A global alliance of non-governmental organisations criticised the initiative for not going far enough. As a result, the G7 countries extended the initiative at their Cologne summit in 1999. The debt relief initiative aims to provide far-reaching debt relief for the HIPCs. In return, however, the partner countries have to commit themselves to giving their development policy a pro-poor focus. They prepare Poverty Reduction Strategy Papers (PRSPs) in line with the principles of transparency, participation and accountability.