World Bank extends programme reducing poor nations’ commercial debt to 2017

The World Bank’s International Development Association (IDA), has decided to extend its Debt Reduction Facility (DRF) until the end of July, 2017.

The IDA took the decision when its Board of Executive Directors gave approval for the extension on April 12, 2012.

In a statement, the World Bank explained that this was in “order to help heavily indebted poor countries continue to reduce their external commercial debt.”

“Fostering debt sustainability in the poorest developing countries requires action to reduce their stock of external commercial debt,” said Jeffrey D. Lewis, World Bank Director for Economic Policy and Debt.

According to Lewis, the DRF has already helped many such countries buy back debts owed to external commercial creditors at a deep discount, and with the five-year extension agreed, such efforts can continue.

The DRF has supported 25 external commercial debt reduction operations in 21 countries since its establishment in 1989.

It has also helped extinguish an estimated $10.27 billion in external commercial debt obligations in the beneficiary countries –$5.05 billion in outstanding principal and $5.22 in accrued interest, arrears and penalties, according to the World Bank.

By Ekow Quandzie