33546

                                  REPUBLIC OF CONGO

                               CHAIRMAN'S SUMMING UP

    Preliminary Documenton the Initiativefor Enhanced Heavily Indebted Poor
                                       Countries (HIPC)
                Informal Meetingof Board of Executive Directorsof IDA

                                       August 25,2005


        TheExecutiveDirectorsconsidered         the preliminarydocumentoftheInitiativefor
HeavilyIndebtedPoorCountries(HIPC)         for theRepublicofCongopreparedbystaffsofthe
WorldBankandthe IMF.

        Directors were supportive of the overall assessment and acknowledged the Republic of
Congo'sprogressinimplementingfinancialandstructuralreforms.They            also notedtherecent
conclusion of the first reviewofthePRGFbythe           IMF ExecutiveBoard.Directorsnoted,
however, that the Republic of Congo faces major challenges in reducing widespread and deep
poverty.Directorsagreedthat        the Government'sinitial    efforts to enhancereportingand
accountability, and to developamedium-termagenda of reforms through a broad consultative
process were encouraging, particularlyasregards the oil sector,but they also suggested that these
efforts should be sustained and deepened to other natural resource sectors. Directors urged the
Republic of Congo to completethePRSPasquicklyaspossibleduring                 2006, andinthe
meantime, to fully implement the interim PRSP.

        The specific conclusionsof the discussion canbe summarized as follows:


   0    Eligibility. Directorsagreedthataccording     to preliminaryestimates,theRepublicof
        Congo's NPV of external debt is likelyto be above the HIPC threshold of 250 percent of
        revenuesatend-2004,aftertakingintoaccountthefulluseoftraditionaldebtrelief
        mechanisms.Onthisbasis,DirectorsagreedthattheRepublicofCongo                 is likely to
        qualify for Enhanced HIPC assistance, givenits track record of performance under IDA
        and IMF-supported reform programs, and its current status as an IDA-only and PRGF-
        eligible country.


   0    Timing of Decision Point. Directors generally agreed that the Republicof Congocould
        reach its Decision Point by end-2005 on a stand alone basis, provided that (i) the country
        remains on track with its macroeconomic program, supported by an arrangement under
        the PRGF, (ii) understandings are reached on appropriatecompletion Point triggers,and
        (iii) further progressis made toward debt reconciliation.

        ProposedFloatingCompletionPoint          Triggers. Directorswereingeneralagreement
        with the proposed triggers for reaching the floating completion point but requested that
        the Decision Point document elaborate on the rationale for the final choice of triggers.
        They also asked that the triggers be streamlined and focused. In this context, Directors
        stressed
               the
                importance
                        strengthening
                         of         governancepublic
                                              and expenditure
        management,includingtheneed        to ensurethatexpendituresarefocusedonpoverty
        reducing activities and thedevelopmentoftheprivatesectorandagricultureactivity.
        Several of them however, thought that triggers pertaining to privatization would not be
        appropriate.

       The Executive Directors emphasized the need to putin place permanent mechanisms for
expenditure tracking in generalandpovertyrelatedexpenditureinparticular,includingthat
financedbyHIPC      savings, aswellasmonitoringandevaluation         of publicservices so as to
provide their quality and accessibility, especiallyto the poor. They expect that the Decision Point
document will address these issues.

       Directors agreed that staff should continue discussions with the Republicof Congo's non-
Paris Club bilateral and commercial creditors and proceed with the preparationof the Decision
PointDocument.