The Government of Australia has a commitment towards offering debt relief to the impoverished countries as it is a useful device for helping the poor countries in poverty alleviation.
The countries having uncontrollable debt amounts have cut down on their expenditure level in building infrastructure and public utility services and as a result, the poverty level in these countries has increased and the growth has become negative.
The Australian Government has a longstanding allegiance to the HIPC or Heavily Indebted Poor Countries Program and since the year 1997, it has donated AU$ 112 million for the program.
As of September 12, 2006, Australia has made a payment of AU$ 136.2 million for the funding purposes of its share in the MDRI or Multilateral Debt Relief Initiative for the first 10 years.
Australia is one of the small number of countries that have completely fulfilled its responsibilities in the first 10 years of the MDRI program.
According to the terms and conditions of MDRI, every debt taken from the World Bank, International Monetary Fund, and the African Development Bank will be exempted for nations, which are eligible for the HIPC program.
The Australian Government also offers bilateral debt relief programs for highly indebted countries with the help of Paris Club. The relief decision taken by Paris Club is based on the evaluation performed by the IMF on the maintenance of debt burden of a country.
In the year 2004, it was decided by the IMF that the debt burden of Iraq was unbearable. As a result, Australia and a number of other countries decided to relieve 80% of the amount of debt that Iraq received from these countries.
The debt relief services offered by Australia are recognized by the OECD Development Assistance
