The International Monetary Fund and the World Bank's International Development Association agreed yesterday to forgive $3.5 billion in debt for Ghana after deciding the country had followed through on its pledges under the Heavily Indebted Poor Countries Initiative.

Ghana becomes the 14th country to reach the HIPC completion point, joining Benin, Bolivia, Burkina Faso, Ethiopia, Guyana, Mali, Mauritania, Mozambique, Nicaragua, Niger, Senegal, Tanzania and Uganda.

The total debt relief in net present value amounts to $2.2 billion, including $782 million in debt forgiveness from IDA and $112 million from IMF. Other donors are also expected to forgive their share of debt under the plan, IMF said.

Debt relief, combined with bilateral assistance beyond HIPC relief, will reduce Ghana's debt-to-export ratio to 84 percent and its debt-to-government revenue ratio to 130 percent in 2004.

The IMF/IDA decision comes after Ghana agreed in 2002 to undertake reforms, including a poverty reduction strategy, the maintenance of a stable macroeconomic environment and the implementation of key reforms in governance, education and health. All of the targets were met, except for one relating to petroleum.

The country's real gross domestic product grew from 3.7 percent in 2000 to 5.2 percent last year, while poverty-related spending increased from 4.5 percent in 2001 to 6.5 percent in 2003 (IMF release, July 13).