[[File:Heavily Indebted Poor Countries As of 29 Jan 2021.svg|thumb|The states recognized as the heavily indebted poor countries (HIPC).
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The heavily indebted poor countries (HIPC) are a group of 39 developing countries with high levels of poverty and debt overhang. Because of these factors, the International Monetary Fund (IMF) and the World Bank have classified them as eligible for special assistance.
The HIPC Initiative was initiated by the International Monetary Fund and the World Bank in 1996, following extensive lobbying by NGOs and other bodies. It provides debt relief and low-interest loans to cancel or reduce external debt repayments to sustainable levels. This means the nations can repay debts in a timely fashion in the future. To be considered for the initiative, countries must face an unsustainable debt burden that cannot be managed with traditional means.
37 countries have completed the program and had their external debt cancelled in full, after Somalia passed the Completion Point in 2020.
An additional two countries (Eritrea and Sudan) are being considered for entry into the program as of March 2020. This occurred after Sudan's civilian-led transitional government and its cabinet led by Abdalla Hamdok implemented tough economic reforms to reach the decision point.
Requirements
To receive debt relief under HIPC, a country must first meet HIPC's threshold requirements. At HIPC's inception in 1996, the primary threshold requirement was that the country's debt remains at unsustainable levels despite full application of traditional, bilateral debt relief. At the time, HIPC considered debt unsustainable when the ratio of debt-to-exports exceeded 200-250% or when the ratio of debt-to-government revenues exceeded 280%.
Funding
The IMF estimates that the total cost of providing debt relief to the 40 countries currently eligible for the HIPC program would be around $71 billion (in 2007 dollars).|sign=|source=
Responses to criticism
HIPC addressed its shortcomings by expanding its definition of unsustainable debts, making greater relief available to more countries, and by making relief available sooner.
As of December 2006, twenty-one countries have reached the HIPC completion point. Nine additional countries have passed the decision point and are working toward completion. Ten other countries carry unsustainable debts according to HIPC standards, but they have yet to reach the decision point. So far, the IMF and World Bank have approved $35 billion of HIPC debt relief. Five countries have received an additional $1.6 billion in "topping up" assistance since 2001.