The International Fund for Agricultural Development (IFAD) has joined forces with the European Union (EU) to reduce the Republic of Nicaragua’s debt, within the framework of the Highly Indebted Poor Countries (HIPC) Initiative.

The HIPC Initiative is a tool designed by the World Bank to help poor, severely indebted countries reduce debt as part of an overall poverty reduction strategy. Partners in the programme include creditor and debtor governments, multilateral organizations, NGOs and civil society.

In January 2004, the EU transferred USD 9.5 million to IFAD via the World Bank’s HIPC Trust Fund. A month later, the funds were credited against Nicaragua’s outstanding debt with IFAD, and talks began about new areas of investment in the country.

A new IFAD project is expected to begin in Nicaragua in February 2005.