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doi: 10.1080/02255189.2001.9668818pmid: N/A
This paper argues that the twin attributes of public ownership of the heavily indebted poor country (HIPC) debt, and the relative systemic irrelevance of these countries' economic performance led to an almost decade-long delay in the provision of substantial debt relief for these countries. While private creditors were forced to come to terms with the middle-income country debt, public creditors could afford to sustain the fiction of a liquidity crisis much longer (implying little need for debt reduction). This delay was costly for these countries as they fell behind other countries of comparable income levels in both human and economic development terms. The paper also offers some estimates of the size of the debt overhang facing these countries, and hence potential bases for determining the adequacy of current debt-reduction efforts.
Andersen, Lykke E.; Nina, Osvaldo
doi: 10.1080/02255189.2001.9668819pmid: N/A
This paper examines the Bolivian experience with regard to debt relief through the HIPC Initiative. It has been agreed in principle that the debt-relief funds will be channelled to municipal governments in order to strengthen the decentralization process and to secure maximum poverty reduction. If everything goes according to the plan, the HIPC Initiative could have a substantial effect on poverty in Bolivia. However, the entire project builds on some very optimistic assumptions regarding the performance of the Bolivian economy during the next 18 years. If these assumptions do not hold, Bolivia will not reach the target debt/export ratio of 150. Worse, if the country's economic performance does not live up to expectations, investment projects (roads, schools, hospitals, etc.) may remain half-finished, and unable to be maintained, because the central government cannot deliver the funds that donors have obliged them to commit to the municipalities as a condition of debt relief.
doi: 10.1080/02255189.2001.9668820pmid: N/A
This paper reviews the status of Ethiopia's external debt, identifies the conditions that led to its growth, and suggests means to reduce it. More specifically, the paper examines the conditions under which the objectives of reducing poverty in Ethiopia can be achieved. Not only is the country's debt unsustainable, but also, even though forge amounts of debt relief were allowed, they will not be sufficient for the country to fulfill its responsibility toward global poverty reduction goals. Assuming there's no change in income distribution, Ethiopia would have to increase its GDP by more than 8% a year over the next twenty years to allow the country to meet internationally agreed poverty reduction targets. Complete debt forgiveness, accompanied by additional resource inflows will be necessary if an attempt is to be made to meet that objective.
doi: 10.1080/02255189.2001.9668821pmid: N/A
This paper examines Nicaragua's experience with the Enhanced HIPC Initiative. Particular attention is paid to the country's experience leading up to the decision point of the Initiative, the magnitude of resource flows resulting from debt relief, and the attitudes of various sectors of the population to debt relief. The research reported here indicates that, though the HIPC Initiative will result in a substantial reduction in Nicaragua's foreign debt, the expected amount of debt forgiveness does not match, either in terms of magnitude or implied discount, some earlier debt reduction operations. Further, the flow of debt relief envisaged would represent a less than 20% enhancement of recent aid flows. While there is general support in Nicaragua for debt reduction and the associated public consultation, what is seen as a top-down, overly limited, and hasty consultation process has come in for severe criticism from several sectors of Nicaraguan society. Beyond debt relief, many Nicaraguans view greater access to developed-country markets, and more innovative and coordinated approaches to development financing, as indispensable to long-term poverty reduction.
Coulibaly, Massa; Diarra, Amadou; Keita, Sikoro
doi: 10.1080/02255189.2001.9668822pmid: N/A
On September 6, 2000, Mali received US$870 million in foreign debt reduction under the HIPC Initiative. This amount is equivalent to just over one third of the country's foreign debt in current terms. This decision was a breakthrough for Mali, where at least two thirds of the population lives below the poverty line. However, some major challenges will have to be overcome before the Enhanced HIPC Initiative completion point is reached, particularly since the Bretton Woods institutions approved Mali's application with serious reservations partly as a result of Mali's weak Interim Poverty Reduction Strategy Paper. In addition, largely because the reduction is spread out over a lengthy 30-year period, the HIPC Initiative alone seems insufficient to permanently eliminate Mali's debt crisis. A combination of measures in addition to the HIPC Inititiave would be the most effective, including halting capital flight, fighting tax fraud, issuing domestic public securities, and all the other traditional methods of financing debt.
doi: 10.1080/02255189.2001.9668823pmid: N/A
This paper examines Uganda's experience with external debt and debt relief measures, in particular, the country's experience with the HIPC Initiatives (the original and the Enhanced one), and their relevance to poverty reduction. The Ugandan government's attempt to improve its record on social development has led to the country's first Poverty Eradication Action Plan (PEAP) in 1997, the second installment of which in 2000 has become Uganda's Poverty Reduction Strategy Paper (PRSP). Though Uganda's PEAP is not without its weaknesses, continued adherence to its main principles should ensure sustained progress in poverty reduction. The HIPC assistance is expected to free significant budgetary resources for Uganda's poverty reduction strategy, thus allowing the country to implement the development goals set out in its PRSP. In fact, average budgetary savings over the period 2000–2015 due to HIPC assistance is estimated to amount to as much as US$55.5 million per annum.
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